Chart of the week
The business cycle dating committee of the National Bureau of Economic Research (NBER) has delivered its verdict: the recession that began following the Covid-19 restrictions in February 2020 ended two months later, in April. This makes it the shortest recession in over 150 years, with the previous record holder being the 1980 recession that lasted six months.
To put dates on economic recessions, the NBER examines a broad range of indicators including industrial production, employment, real personal income and retail sales. A recession begins when these indicators start to fall and ends when their low points have been reached and the indicators start to recover.
OUR ANALYSIS
The latest recession, in addition to being the shortest ever, is also an historical first because it was entirely exogenous. Due to its unusual nature, the various indicators examined by the NBER are taking quite different lengths of time to reach their various pre-recession highs. While retail sales exceeded their February 2020 level the following June, it is only in recent months that non-transfer income has fully recovered. Meanwhile, GDP probably exceeded the fourth-quarter 2019 level in the second quarter of 2021 and industrial production is just 1% below that of February 2020. In contrast, employment remains 4% below its pre-crisis rate and took five years to exceed its previous high following the 2008–09 recession.
The following opinion was written on July 21 2021 and is susceptible of changing.
Sources : Bloomberg, and calculation from Lazard Frères Gestion
As of : 21 July, 2021.
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