Review discussions on America’s most recent downturn, comparing the impacts and definitions of Covid-19 and the Great Recession. Analyze the significant effects of past economic crises on US policy and business approaches.
By Brad Nakase, Attorney
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There is a lot of debate about when was the last recession in the US. While there is no global definition of a recession, traditionally economists have considered a recession to be a significant and widespread economic decline that lasts for at least 6 months. However, the last recession in the US does not meet this definition, so economists disagree whether the Covid-19 Recession or the Great Recession was the last recession in the US.
There have been 4 recessions in the United States over the last 30 years:
Not all economists agree on when was the last recession in the US because the Covid-19 recession was so short. Some believe it is so short that it doesn’t count as a recession. However, the NBER, the unofficial experts on recessions here in the States, believe it is a recession because of the huge impact it had on the economy.
Let’s look at the arguments on either side for when was the last recession in the US.
The Covid-19 Recession in 2020 is the last recession in the US, according to the NBER. While there is no official expert on recessions, the NBER records economic data and is widely seen to be an expert on US recessions.
The NBER believes that the Covid-19 Recession was the last recession in the US. It didn’t last 6 months, but the impact on the economy was so great that the NBER decided it constituted recession status. In the US, the Covid-19 Recession led to some high recession statistics:
Every industry was affected during the Covid-19 Recession as people were told to stay home and tight restrictions were placed on those who had to physically attend work. Business production slowed down considerably. Companies had to adapt the way they did business and it was easier for some types of businesses than others.
The unprecedented amount of stimulus the government approved during the pandemic ($5 trillion pandemic relief) paired with businesses getting creative about how to operate during a lockdown prevented the Covid-19 Recession from being the most severe in history.
While the last recession in the US only lasted 2 months, it is believed that the severity of economic decline during those 2 months is why the NBER classified it as a recession.
There is no debate over whether the Great Recession was a recession. It is considered one of the worst recessions in recent years. The Great Recession is considered by many to be the last recession in the US.
It officially lasted for 18 months, but it took 4 years for the US economy to recover to pre-recession levels.
The Great Recession was caused by the housing bubble bursting, which triggered a financial crisis that turned into a recession. Here are some of the recession statistics from the Great Recession:
If you compare the recession statistics of the Great Recession to the Covid-19 Recession, you can see why the NBER decided the impact Covid-19 had on the economy while only lasting 2 months, making it worthy of a recession.
The Great Recession was felt most in the US, but many of the countries that do a lot of business with the US were impacted by the Great Recession. As with the Covid-19 Recession, the US government did issue stimulus checks to US households during the Great Recession, but a lot of their recession spending was tied up in bailing out financial institutions. As with the Covid-19 Recession, the Great Recession affected every single industry because the issue was a lack of demand. Households had just seen the value of their homes plummet, and many Americans lost their homes either through defaulting on bad mortgages or because their mortgage lender went under.
Depending on whether you count the Covid-19 Recession as a recession, your answer for when was the last recession in the US may differ from others. Whether you believe the Covid-19 Recession or the Great Recession was the last recession in the US, they both had a significant impact on the US economy and changed the way we do things.
The Great Recession changed financial policy for the better, giving the government more oversight over financial practices. The Covid-19 Recession didn’t just affect the way we do business, more of our lives moved online. So no matter the answer, the last recession in the US changed our country.
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