In an earlier post, the FRED Blog compared economic activity during the COVID-19-induced downturn and recovery across the G-7 countries: the U.S., the U.K., Japan, Canada, France, Germany, and Italy. Today, we focus on the U.S. and compare activity during the 2020-2021 downturn and recovery with activity during past episodes.
The FRED graph above plots the value of quarterly real (i.e., adjusted for inflation) GDP during and after the five most recent economic recessions: 1981-1982, 1990-1991, 2001, 2007-2009, and 2020-2021 (red dashed line). The billions of dollars reported by the U.S. Bureau of Economic Analysis are plotted as a custom index. The index has a value of 100 at the start of each recession, which is marked as the zero “date” on the left-hand side of the graph. Each period to the right of that “date” represents one quarter afterward.
In the 2001 recession, real GDP did not decrease. But in all the other economic contractions, real GDP fell below its pre-recession level for several quarters. The other recessions took more than a year to bounce back; but one year after the onset of the COVID-19-induced recession, U.S. real GDP is already above its pre-recession value.
So, is this the fastest recovery in overall economic activity on record? Most likely, yes.
In a previous post, we used annual data to compare economic recoveries since 1937. But quarterly real GDP data aren’t available prior to 1947, so we can’t directly compare the episodes in the graph above with the 1937-1938 episode in the graph we produced a year ago. Still, a year after the 1937-1938 recession started, real GDP was 3.7% below its pre-recession value. And four quarters after the COVID-19-induced recession started, real GDP was already 0.4% above its pre-recession value.
If you follow the FRED Blog, you already know that over the past year different sectors of economic activity have expanded and contracted at different rates. Keep in touch with the blog and learn more about the shape of the ongoing recovery over the next few months.
How the graph was created: From a previous blog post: Search FRED for “real gross domestic product” and select the series with the ID “GDPC1.” Add the same series to the graph four more times. Next, change the units to “Index (Scale value to 100 for chosen date)” and use the expanded menu to select the date to which you’d like to index each series. From the U.S. recession menu, select these dates for the five series: 1981-07-01; 1990-07-01; 2001-03-01; 2007-12-01; and 2020-02-01, the start dates of the early 80s recession, early 90s recession, early 2000s recession, the Great Recession, and the COVID-19-induced recession (according to the NBER), respectively.
For each series, check the “Display integer periods” box. The x-axis will show integers as time periods instead of dates. The base period is shown as 0: Negative numbers represent periods (quarters, in this case) before the base period, and positive numbers represent periods after the base period. Change the start integer to 0, so the graph begins at the start of each recession. Change the end integer to 8, so the graph ends 8 quarters after each recession started. Finally, to use the same graph style shown here, select the circle option under “Mark Type.”
Suggested by Diego Mendez-Carbajo.