When the U.S. economy first went into a tailspin in March as the country entered lockdown, initially there was hope for a “V”-shaped recovery – that the economy would come back as quickly as it had declined – once businesses could safely reopen and people could resume their everyday routines. Indeed, that was the premise of the first pandemic relief bill: to tide over households and businesses until the economy could safely restart.
But that scenario was never realistic. Such a prospect depended, of course, on controlling the coronavirus. However, the pandemic never fully receded but instead ebbed and flowed, with each wave of infections decidedly worse than the one preceding. So, while most businesses were able to reopen, whole swathes of the economy remained shuttered, limiting the recovery. More importantly, most consumers did not feel comfortable undertaking everyday activities like eating in restaurants, shopping in a mall, or even returning to work, further undercutting and postponing the recovery.
How has the recovery been proceeding? Key findings from my analysis:
- The initial downturn was unusually swift and deep, as was the initial recovery, but the recovery path is reverting to more typical patterns as the expansion has lost momentum.
- New forecasts from the Congressional Budget Office predict that GDP will return to its pre-pandemic peak by this summer, though jobs won’t regain their former peak for three more years.
- Even after we regain the output and jobs lost during the recession, we will still suffer a deficit relative to what might have occurred absent the pandemic and the ensuing.
Read the full article on Seeking Alpha.
Posted: by Andrew J. Nelson
