Is the Recession Already Over?

Is the Recession Already Over?

Nathan J Fish/Sun-News

The coronavirus pandemic is still raging — and the Trump administration is projecting that it is about to get worse, with the number of new cases surging to about 200,000 a day and deaths rising from about 1,750 now to about 3,000 a day by early June, according to an internal report obtained by The New York Times. (“This is not a White House document nor has it been presented to the Coronavirus Task Force or gone through interagency vetting,” a White House spokesman told the Times.)

Yet some top Wall Street economists say that the coronavirus recession is over, Bloomberg Businessweek’s Peter Coy reports:

“Over the past two days, top economists from Goldman Sachs Group Inc. and Morgan Stanley issued reports saying the world economy was hitting bottom. If true, that means the recession is over and a recovery has begun. … To the average person, a recession means economic conditions are bad. But to an economist, a recession means economic conditions are worsening. Once they stop getting worse and start getting even a little bit better, a recovery has begun. Break out the bubbly and have a social distancing party. … By Morgan Stanley’s estimation, China bottomed in February, the euro zone probably bottomed in April, and the U.S. probably bottomed in late April, with Latin America still not there.”

The bottom line: Those economists’ calls don’t mean the economic pain is over. Far from it. The Great Recession officially ended in June 2009, but unemployment didn't peak until October of that year and stayed at 9.4% for all of 2010. So recovery is likely to be much slower than the dramatic shutdown-induced plunge into recession. And, as Coy notes, the economists could simply be wrong. If projections of the pandemic worsening come true and states now attempting or contemplating reopening are forced to revert to lockdowns, the economic optimism will likely prove short-lived.