Economists Announce The U.S. Economy Is Officially In A Recession
ARI SHAPIRO, HOST:
It's official. The United States is in a recession. That might seem like an obvious statement. After all, unemployment last month topped 13% as economic activity slowed to a crawl across the country. But for people who keep track of such things, it's not officially a recession until the scorekeepers at the National Bureau of Economic Research say so, which today they did.
NPR's Scott Horsley joins us to talk about this. Hi, Scott.
SCOTT HORSLEY, BYLINE: Hi, Ari.
SHAPIRO: Start with the definition. What does it actually mean to say the economy is in a recession?
HORSLEY: Well, it means we're in a sustained period of economic contraction. As a practical matter, the announcement doesn't mean a whole lot. It doesn't trigger government action or anything like that. This does mean that when you go to print the charts in the newspaper, they'll know where to put the shaded area.
HORSLEY: But let's face it - this was not exactly a close call. I mean, this is a recession you could spot from outer space. We lost 22 million jobs in March and April. Just about every industry saw a spike in unemployment. And GDP, which shrank a little bit in the first quarter, is expected to fall off a cliff in the current quarter.
SHAPIRO: In that case, what took so long to call this a recession?
HORSLEY: Well, actually, by the standards of the National Bureau of Economic Research, this was a pretty fast call. It usually takes the team about nine months to a year to decide we're in a recession. In this case, they made the announcement in just about three months. You don't need a Ph.D. in economics to know we're in a deep downturn. But what the committee's really trying to do is figure out when the recession started. Now, in a normal recession, that can be kind of hard to pinpoint because often the trouble starts small in one little corner of the economy and then ripples out. This, of course, is not a normal recession. It hit everywhere within a matter of weeks when we deliberately locked down the economy in an effort to slow the spread of the coronavirus.
Now, the committee says the U.S. economy stopped growing in February, after an economic expansion that had lasted more than a decade. That was by far the longest expansion in history, dating back to the 1850s. And it ended not with a whimper but with a coronavirus bang. And we've been in a pandemic-driven recession ever since.
SHAPIRO: But the unemployment numbers for May were actually pretty good. The economy added jobs. So when will we know if we're out of a recession?
HORSLEY: Yeah. That sometimes takes a little bit of - a while, too. But in the announcement today, the committee did point to the possibility that as deep as this is, the recession could prove to be fairly short. You mentioned that pleasant surprise we got from the Labor Department on Friday that we'd actually added jobs last month - a fraction of the jobs that went away in the two previous months but still a step in the right direction. A lot of forecasters also expect to see GDP start to grow again this summer after a very sharp contraction during the spring.
So if that happens, it's entirely possible the scorekeepers will look back and say this recession that started in February ended in maybe June or July. But keep in mind the end of the recession does not mean everything's back to normal or the people are feeling good again. It just means we've hit bottom and things are not getting any worse. If you look back a decade, the Great Recession officially ended in June of 2009, but it took a long time after that to dig out of the hole. And it was many years before a lot of folks felt like they were actually enjoying the recovery.
SHAPIRO: And just briefly - what about a depression? Is there a committee that decides when the economy is in a depression?
HORSLEY: No. But if in fact this ends quickly, it should not be another Great Depression. It's already deeper than the Great Recession, so we are going have to put our heads together and maybe come up with a better name for this situation we find ourselves in.
SHAPIRO: NPR's Scott Horsley, who just gave himself his next assignment.
Thanks a lot.
HORSLEY: (Laughter) Thanks, Ari. Transcript provided by NPR, Copyright NPR.