The U.S. economy capsized in the face of the coronavirus pandemic, and alarm bells are starting to sound over fears that the recession could morph into a protracted, deeper downturn – if it hasn’t already.
The majority of economists (or 79 percent) polled for Bankrate’s Second-Quarter Economic Indicator survey say the economy is in a recession, a call confirmed this week by the National Bureau of Economic Research’s Business Cycle Dating Committee (NBER). But 8 percent say the downturn is something else, while 13 percent say the economy is experiencing its first depression since the Great Depression.
By most experts’ definitions, a deep and prolonged period of economic hardship is what separates the inevitable recessionary cycle from its uglier counterpart, the depression. The first requirement has been all but fulfilled. In what’s described as the most devastating downturn in generations, the coronavirus crisis has caused employers to cut a cumulative 22 million jobs, with the unemployment rate tripling to its highest since the 1930s.
It’s the second part that’s still up in the air. The U.S. economy is showing signs of rebounding, with employers in May hiring again and joblessness creeping down to 13.3 percent. Yet experts have emphasized that a long road still lies ahead for the job market and the economy overall after being at their best in decades just three months ago. Fears of a second wave prompting another round of lockdowns could kick an ailing economy while it’s already down; meanwhile, a prolonged demand slump could force employers to permanently close their doors – stranding even more workers on the sidelines.
It all illustrates just how precarious of a position the U.S. economy is in as the country inches toward the pre-pandemic normal. Here’s how the nation’s top economists are reading the situation.
Economists’ survey: What they said
» The U.S. economy is in a recession
» The U.S. economy is in a depression
» The current downturn is something else
Featured image by William Campbell of Getty Images