The US recession lasted for two months, and ended in April 2020: NBER

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Yahoo Finance’s Brian Cheung reports the latest National Bureau of Economic Research report on the 2020 US recession and Biden’s comments on inflation and economic recovery.

Video version

Alexis Christophoros: Welcome back. The official body tasked with declaring recessions said today that the pandemic triggered by the recession in the United States effectively ended in April last year — just two months after it began. Brian Cheung of Yahoo Finance is here with more. And I think a lot of people are hearing that might take them to the task, Brian.

Brian Chung: Yeah, well, the reason is that it took 15 months to announce that. But the National Bureau of Economics – rather, the National Bureau of Economic Research tends to be very conservative about naming these kinds of things. They want to make sure they have enough data to confidently confirm that a recession either started or ended in a certain period of time.

But people who have been watching this space will remember that it was back in June when the NBER announced that the recession started in February of 2020. Now here we are in July of 2021, and they are now saying that April of 2020 was when the recession officially ended, at least Economically. It is clear that the human damage has extended much further. But the two-month recession, as announced by the National Bureau of Economic Research, is officially the shortest on record for the United States.

The National Bureau of Economic Research said it looked at things like unemployment specifically. If you take a look at the unemployment chart, it’s very clear that the highest unemployment rate we’ve seen during the pandemic was in April of 2020. The same is true for non-farm payroll levels.

Now, NBER said it’s been hard to look at things like GDP, which is usually a metric they’d prefer to look at in terms of economic activity because the COVID crisis has been moving so fast. People in the world of economic data know that GDP is released on a quarterly basis. So these data points were not frequent enough to come to this conclusion.

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Now take a look at what they said in today’s statement. Quoting, they said, “The committee concluded that the unprecedented magnitude of the decline in employment and production and its wide spread across the entire economy justified classifying this episode as a recession, even though the downturn was shorter than the previous one.” So NBER also acknowledged in the statement that it’s not much like anything else they’ve seen and tried so far. A very interesting comment on that from NBER, again, Alexis, declaring that the recession officially ended in April of last year.

Alexis Christophoros: Well, it’s better late than never on this news. Also, I’d like to quickly touch President Biden in his remarks — the public remarks that were made this morning. He threw his weight on inflation and he also had a message for Federal Reserve Chairman Jay Powell. What should I say?

Brian Chung: Yeah, well, in the kind of response to high rates of inflation that we’ve had recently, the president addressed the media earlier today and said that the White House isn’t necessarily concerned about inflation running out, especially nothing to match the hyperinflations of the 1970s. But listen to what he told reporters earlier this morning regarding how he specifically spoke to the Federal Reserve on these matters as well.

JOE BIDEN: I want to be clear, my administration understands that if we’re going to have uncontrolled inflation in the long run, that’s going to be a real challenge for our economy. So while we’re confident that’s not what we’re seeing today, we’ll remain vigilant about any response needed. As I made clear to Fed Chair Powell when we met recently, the Fed is independent in taking whatever steps it deems necessary to support a strong and lasting economic recovery.

Brian Chung: And that’s pretty much in line with what I’ve heard from sources in the White House who were saying, yeah, these inflationary prints are, in fact, eye-catching based on the headlines, but that’s when you look at things like the five-year break, that Inflation isn’t necessarily a concern for them, at least from a market-dependent point of view, which should give the administration perhaps a little wiggle room, especially with regard to that infrastructure deal, Alexis.

Alexis Christophoros: Well, thank you very much, Brian Cheung.

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