The US Gets Fastest Recession Declaration In History

An elite group of US economists are declaring a recession with just one quarter worth of data. National Bureau of Economic Research (NBER), a private organization of top economists is the pseudo authority on the US business cycle. The organization has declared the US economy began a recession in February. This marks the end of the longest bull cycle in American history, as well as the fastest onset of a recession ever.

Wait… Isn’t It Too Soon To Declare A Recession?

A recession is declared after two quarters of gross domestic product (GDP) declining. However, NBER decided to make the call a little earlier than normal. The committee defines a recession as “a decline in economic activity that lasts more than a few months.” If there’s a significant decline in activity observed across the economy, they can make the call quickly. In this case, GDP and employment were so bad, they didn’t need to see two consecutive quarters. They noted the speed of this contraction “warrants the designation of this episode as a recession, even if it turns out to be briefer than earlier contractions.” In other words, this was the fastest onset of a recession for as long as they have data.

The US Economy Peaked In February 2020

The committee observed a peak for the economy in February, with GDP and payrolls topping. Payroll employment stalled from December through February, before collapsing in March. They also noted many people are being paid but not working, which means the impact to productivity is higher than can be readily observed. As for GDP, monthly real personal consumption expenditures (PCE) peaked in February, and this represents about 70% of real GDP. This was enough to drag the first quarter of the year lower than Q4 2019, which is now the quarterly peak.

US Economic Corrections In Months

The number of months from peak to trough for the US economy, as determined by NBER.

Source: NBER, Better Dwelling.

End of The Longest Expansion In History

A record wasn’t just set for how quickly the recession was declared, it also marked the end of the longest expansion. The US economy expanded for 128 months from trough to peak. The previous record was from March 1991 to March 2001, which totaled 120 months. No other expansion comes close in the organization’s data set, going back to 1854.

US Economic Expansions In Months

The number of months from trough to peak for the US economy, as determined by NBER.

Source: NBER, Better Dwelling.

Hopefully you made a little cash since 2009, the longest period of gains in history. After all, over the past 30 years, the shortest recession was 6 months, and the longest – beginning in 2008 – lasted 18 months.

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  • Jay Miller 3 years ago

    But the stock market is at all time highs, so who needs an economy? haha

  • Marc 3 years ago

    Wave of US insolvencies higher than the Great Recession are being forecasted, and prices barely recovered.

    “Oxford Economics estimates that 15% of homeowners will fall behind on their monthly mortgage payments due to the coronavirus crisis — a level exceeding that seen during the Great Recession when the peak delinquency rate was 10%”

  • zalzon 3 years ago

    did we need PhD economists to tell us that.

    the fine art of stating the obvious

  • Boomer Doomer 3 years ago

    U.S stock market is detached from reality we all know that. What many dont know is Canada is already a doomed economy. Canada is like Japan before their housing bubble popped. After Japan signed the square accord their currency increased and many export businesses became unproductive. They than turn to real estate speculation. Same with Canada, it has no world competitive industry so the government decided cresting a housing bubble is the best option.

    Dont be fooled this is a government sponsored housing bubble. This time it will pop, should have done the right thing and foster talent in Canada instead of squeezing the young and talented to feed boomer paper wealth.

    • RainCityRyan 3 years ago

      Housing over priced? sure!
      Bubble in some areas? You betcha.

      Japan 90-91 when the imperial gardens in Tokyo ( were worth more than ALL OF CALIFORNIA (like more than LA, San Fran, San Diego etc etc)?
      I don’t think were quite there yet.

  • Joseph 3 years ago

    I tend to agree with the following statement off another website,

    “For example, the NBER may declare not a recession simply because of two quarters of very slight negative growth, but rather an economic stagnation. However, they do not precisely define what is meant by “a significant decline,” but rather determine if one has existed on a case by case basis after examining their catalogued factors which have no defined grade scale or weighting factors. The subjectivity of the determination has led to criticism and accusations committee members can “play politics” in their determinations.”

    The motives of the NBER really need to been considered.

    Further, in the first two sentences of this article, the following terms are used to describe the NBER – ‘an elite group of US economists’, ‘top economists’, & ‘pseudo authority’.

    I’ve found that when someone needs to put that much emphasis on something, a sale is trying to be made/too much of a push to get the readers to believe something that may not be as accurate as stated.

    I think the first two sentences could have been simply written as,

    “A group of US economists are declaring a recession with just one quarter worth of data. National Bureau of Economic Research (NBER), a private organization of economists on the US business cycle.”

    Keep it simple. No need to inflate the value of anything in your articles. Let organizations and data speak for themselves.

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