Thursday , January 28 2021
Home / Jeffrey Frankel's Blog / Is the coronavirus recession of 2020 unprecedented?

Is the coronavirus recession of 2020 unprecedented?

Summary:
TweetA reporter asks:  Will this prolonged rut take longer for the American economy to recover from than any recession in their lifetime? My answer: The coronavirus recession this year is set to be worse than the Great Recession of 2007-09, is unprecedented in its suddenness, and is likely to show the deepest economic trough since the 1930s.  The most natural precedent is the global influenza pandemic of 1918-20, which has been estimated to have caused negative growth of 6% in the typical country, in a recent paper by Robert Barro, Jose Ursua, and Joanna Weng. My best guess is that the subsequent recovery time from the 2020 recession will not be as long as the Great Depression and perhaps not even as long-lasting as the recovery from the Great Recession of 2007-09.  My instinct is that

Topics:
Jeffrey Frankel considers the following as important: ,

This could be interesting, too:

Menzie Chinn writes “Will Joe Biden’s fiscal stimulus overheat the American economy?”

Menzie Chinn writes Downside Employment Surprise and Business Cycle Indicators as of January 8th

Menzie Chinn writes Business Cycle Indicators, January 4th

Simon Wren-lewis writes Why the UK’s COVID crisis should be personal for so many Tory voters

A reporter asks:  Will this prolonged rut take longer for the American economy to recover from than any recession in their lifetime?

My answer: The coronavirus recession this year is set to be worse than the Great Recession of 2007-09, is unprecedented in its suddenness, and is likely to show the deepest economic trough since the 1930s.  The most natural precedent is the global influenza pandemic of 1918-20, which has been estimated to have caused negative growth of 6% in the typical country, in a recent paper by Robert Barro, Jose Ursua, and Joanna Weng.

My best guess is that the subsequent recovery time from the 2020 recession will not be as long as the Great Depression and perhaps not even as long-lasting as the recovery from the Great Recession of 2007-09.  My instinct is that once the number of infections peaks and falls to low numbers, workers will eagerly go back to work, consumers will release pent-up demand, and firms will re-stock inventories.  I know that some others disagree. I could easily turn to be wrong about the speed of recovery, especially if the contagion returns after people start going back to work.  But that is my guess.

Jeffrey Frankel
Jeffrey Frankel, a professor at Harvard University's Kennedy School of Government, previously served as a member of President Bill Clinton’s Council of Economic Advisers. He directs the Program in International Finance and Macroeconomics at the US National Bureau of Economic Research, where he is a member of the Business Cycle Dating Committee, the official US arbiter of recession and recovery.

Leave a Reply

Your email address will not be published. Required fields are marked *