The United States National Bureau of Economic Research said on Monday that the American economy entered a recession in February after hitting a peak. This is the first time the economy has gone into recession since the global financial crisis of 2008-’09, as the coronavirus pandemic has forced America to go into lockdown.
Most economists expect this recession to be both particularly deep and exceptionally short, The New York Times reported. This is because economic activity has restarted in the country as the pandemic has passed its peak.
The United States has reported over 19.6 lakh cases and 1.1 lakh deaths, according to the Johns Hopkins University. Both figures are by far the highest for any country.
“The committee recognizes that the pandemic and the public health response have resulted in a downturn with different characteristics and dynamics than prior recessions,” the Business Cycle Dating Committee of the National Bureau of Economic Research said. “Nonetheless, it concluded that the unprecedented magnitude of the decline in employment and production, and its broad reach across the entire economy, warrants the designation of this episode as a recession...”
But Robert Gordon, a Northwestern University economist and a member of the dating committee, told The New York Times that a recovery had already begun in April or May. The National Bureau of Economic Research formally dates business cycles based on a range of economic markers. This includes the Gross Domestic Product and employment statistics.
In April, the unemployment rate in the United States stood at 14.7%. It eased slightly to 13.3% in May.
World Bank predicts sharp rise in poverty levels
Meanwhile, the World Bank said that the pandemic has triggered the most widespread global economic meltdown at least since 1870, and this could result in a sharp rise in poverty levels, The Guardian reported on Monday. The World Bank said that more than 90% of the 183 economies it has examined will experience an absolute fall in GDP, even more than the countries which entered recession during the 1929-’33 Great Depression.
“The swift and massive shock of the coronavirus pandemic and shutdown measures to contain it have plunged the global economy into a severe contraction,” the World Bank said in its latest edition of the Global Economic Prospect. “The global economy will shrink by 5.2% this year.”
The Indian economy will decline by 3.2% in the 2020-’21 fiscal year, the World Bank predicted.