In March 2020, when COVID-19 public health measures went into effect and the U.S. economy abruptly sank into a deep recession, U economist Peter Philips felt like “I had been in an elevator and somebody had cut the elevator cable.” But the subsequent partial economic recovery, spurred by government stimulus spending, caused him to revise his analogy: “We were on a bungee cord,” he says. “We started recovering almost as fast as we had been falling in the first place.”
But how much spring does that bungee cord have left in it? Is it enough to bounce the economy back to pre-COVID employment levels? Or might the ongoing pandemic last long enough and change consumer behavior enough to drag recovery out for years?
In a video (recorded before the U.S. vaccine emergency use authorization and the passage of a second government stimulus package, both in December 2020), Philips compares this recession to those since World War II and explores the impacts of both the depth and the length of a recession—including the compound effects of a recession that is both deep and long.