US has officially entered first recession since 2009
The United States is officially in a recession, ending the longest economic expansion in US history, the committee that calls downturns announced on Monday.
The National Bureau of Economic Research (NBER) said that economic growth in the US peaked in February and has since entered its first downturn since 2007 to 2009.
The end of the record-setting streak of 128 months of growth came shortly before the coronavirus pandemic hit the US but after the virus had all but halted economic activity in China and other countries.
While economists often define a recession as two consecutive quarters of contraction, the NBER uses a range of factors, including domestic production and employment, to determine whether or not a recession has begun.
“The committee recognizes that the pandemic and the public health response have resulted in a downturn with different characteristics and dynamics than prior recessions. 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, even if it turns out to be briefer than earlier contractions,” the NBER explained in a statement.
On Friday the labor department announced that the US unemployment rate in May was 13.3%, down from 14.7% in April, a post-second world war high, but still nearly four times the rate in February.
The labor department also warned that difficulties with collecting data during the pandemic meant May’s figure should have been 3% higher – 17.7% – and that April’s figure should have been 5% higher at 19.7%.
US economic activity declined by an annualized rate of 4.8% in the first quarter of the year and is expected to fall far more sharply in the second quarter. The Atlanta Fed recently projected that gross domestic product (GDP), the broadest measure of economic growth, could shrink by an annual rate of 53% over the quarter.