The National Bureau of Economic Research, the official arbiter of recessions, said on Monday that the economy hit its peak in February and has since fallen into a recession, as pandemic-related shutdowns brought an end to a record-long expansion.
The committee recognized 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.
A recession is defined as a significant decline in economic activity spread across the economy, normally visible in production, employment, and other indicators. A recession begins when the economy reaches a peak of economic activity and ends when the economy reaches its trough.
U.S. GDP fell 5 percent in the first quarter and is likely to post the worst decline in history for the second quarter — possibly more than 50 percent.
The peak marks the end of the expansion that began in June 2009 and the beginning of a new recession. The expansion lasted 128 months (or nearly 11 years), the longest in the history of U.S. business cycles dating back to 1854. The previous record was held by the business expansion that lasted for 120 months from March 1991 to March 2001.