The US economy officially entered a recession in February, ending the longest expansion in the country’s history, the National Bureau of Economic Research (NBER) said.
The Business Cycle Dating Committee of the NBER, which maintains a chronology of the peaks and troughs of American business cycles, “has determined that a peak in monthly economic activity occurred in the US economy in February 2020”, the NBER said in a statement on Monday.
“The peak marks the end of the expansion that began in June 2009 and the beginning of a recession,” the NBER said, adding the 128-month expansion after the 2008 financial crisis was the longest in the history of US business cycles dating back to 1854.
While analysts often refer to recessions as two consecutive quarters of contraction in the GDP, the NBER formally determines when recessions begin and end on a range of factors in the US, reports Xinhua news agency.
A recession is a significant decline in economic activity spread across the economy, normally visible in production, employment, and other indicators.
It begins when the economy reaches a peak of economic activity and ends when the economy reaches its trough, according to the NBER.
The NBER noted that the COVID-19 pandemic and the public health response have resulted in a downturn with different characteristics and dynamics than prior recessions.
“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,” said the NBER, an association of the nation’s top economic researchers.
The NBER also determined that a peak in quarterly economic activity occurred in the fourth quarter of 2019.
The US economy contracted at an annual rate of 5 per cent in the first quarter this year, compared with a growth rate of 2.1 per cent in the previous quarter, according to the Commerce Department.
The coronavirus began to weigh on the US economy in February and the pandemic forced widespread business closures in the country since mid-March.
More than 42 million Americans have applied for unemployment benefits over the past 11 weeks.
Fallout from the pandemic will shrink the size of the US economy by $7.9 trillion over the next decade, according to projections by the Congressional Budget Office.