Photo: Al Bello, Getty Images via Agence France-Presse
The american GDP fell 4.8% annualized rate during the first quarter of 2020.
The u.s. economy has reached its peak in February and then engage in the recession, the COVID-19 having been a result of the phase expansionist history of 128 months.
The formalization comes from the Committee of the dating of the cycles from the national Bureau of economic research (NBER, in English). The announcement would be no surprise had it not been for the speed with which it came, the independent agency taking usually 9 to 12 months before deciding on the state of economic cycles, reminiscent of Oxford Economics. Also, on a quarterly basis, the NBER determined that the peak of the us growth was achieved in the fourth quarter of 2019, making an expansion 2009-2019 the longest in history for the american economy if we go back up in 1854.
Going beyond the traditional definition of a decline in GDP for at least two consecutive quarters, the committee has amended its definition under the shock of the economic impact of the pandemic. He is rather given to ” the magnitude of the unprecedented decline in employment and production as well as its extent in the economy as a whole “, which justifies the label “recession” the current economic environment, ” even if it had to be shorter than contractions previous “.
“In deciding whether to qualify or not a phase of recession, the committee assesses the magnitude of the contraction, its duration, and whether it has spread to the economy,” he said.
“The committee considers that the pandemic and the response of public health authorities have caused a reversal in which the characteristics and the dynamics are different recessions, different “, according to the content of the press release is picked up by the Reuters news agency.
The american GDP fell 4.8% annualized rate during the first quarter of 2020 and the expected data for the second points to a potential fall in the 20 % or even 30 % annual rate. In mid-may, the federal Reserve chairman, Jerome Powell, was shown to be rather careful, considering that it would probably need more budget support to support a recovery. It was then decided that it was likely a peak of 20 % or 25% of the unemployment rate, and a drop of 20 % or 30 % of GDP in the second quarter.
The boss of the federal reserve is highly expected Wednesday, when he will speak at the conclusion of the meeting of the monetary committee, stresses the Agence France-Presse.