The US Economic Recovery is Stronger Than it Looks
COVID-19 caused a sharp drop in economic activity, but emerging signs are pointing to a smooth recovery
The sudden emergence of COVID-19 caused arguably the most sudden economic shock seen in over one hundred years. Unemployment rose to levels not seen since the Great Depression. The Federal Reserve kicked into action, re-starting Quantitative Easing programs that had been on the shelf since the aftermath of the 2008 recession as well as a number of new programs.
While there are innumerable ways to measure the impacts of the recession, I believe the unemployment rate conveys the suddenness of everything the best. Compared to the gradual build-up of the 2008 recession, the COVID spike is vertical.
Unemployment topped out at nearly 15% in April, far higher than the 10% maximum seen during the 2008 recession. As scary as that looks though, it’s actually a big understatement. The Bureau of Labor Statistics (BLS — who report the unemployment rate) stated that a collection error caused the unemployment rate to be under-stated by nearly 5%. As a practice, the BLS does not alter…
