It’s been about two months since the US began sweeping lockdowns to contain the spread of coronavirus
The economic pain of the coronavirus-induced recession swiftly overtook that of the Great Recession in that short time as millions of Americans have lost jobs, businesses remain frozen, and consumer spending has taken a major hit.
See below for five charts that show how the coronavirus-induced economic downturn compares to the Great Recession.
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It only took a few weeks for economists to agree that sweeping shutdowns to contain the spread of the novel coronavirus had plunged the US economy into a recession.
Now, just two months since the first stay-at-home orders began, the ensuing downturn has surpassed the Great Recession that spanned 18 months between 2007 and 2009.
“It just goes to show you how quickly the current crisis has evolved and how deep it is,” Daniel Zhao, an economist at Glassdoor, told Business Insider. The size and scope of the crisis is very unusual for any kind of quick disruption to the economy, he added.
There has been an overwhelming amount of data showing the full scope of economic pain: millions of Americans have filed for unemployment insurance claims, millions of jobs have been erased, and consumer spending, retail sales, and production have plummeted by record amounts.
The hit to the labor market has been particularly extreme amid shutdowns to contain COVID-19. It only took four weeks for the coronavirus downturn to erase all jobs created since 2009, and nine weeks for unemployment insurance claims to surpass the total filed during the Great Recession — an 18-month span.
In addition, the unemployment rate jumped in April from a 50-year low in February to the highest since the Great Depression of the 1920s and 1930s. And economists think it will be even higher in May’s nonfarm payroll report.
Read more: ‘Likely to be excruciating’: A notorious stock bear says investor reliance on Fed money-printing is misguided — and warns of more than 50% crash from current levels
Apples to Oranges
It makes sense to compare the coronavirus-induced downturn to the Great Recession, as it’s the most recent major economic event, Lindsey Piegza, chief economist at Stifel told Business Insider.
“No one really has the memory to think back to the eighties or the Great Depression,” said Piegza. “So really the comparison that the market’s going to be using is how bad is this relative to the financial crisis — that’s the paradigm that we live in.”
Still, there are some key differences between the coronavirus-induced downturn and the Great Recession. The US made the decision to shut of the economy to deal with a health event, unlike the Great Recession, which was caused by the financial crisis.
“This current crisis is not due to something structurally wrong with the economy,” Zhao said. “It wasn’t caused by a housing bubble or financial crisis.”
The optimistic case is thus that activity and demand should rebound once the economy is back …read more
Source:: Business Insider