Economic Recovery from the Economic Recessions: Does this Time Differ?

Abstract

The 2020 COVID-19 economic recession has differed from past recessions when comparing macroeconomic factors such as unemployment rate, industrial growth, and inflation. By creating and analyzing data sets with these factors overlaid onto the business cycles ranging from 1948 to 2021, the COVID recession showed negative spikes in the former two rates whilst inflation rose during the period; this breaks the recurring pattern of low inflation during a recession once more. Upon such an analysis, it is clear that the COVID recession showed a short but more significant economic impact through directly affecting the labor market. In natural response cost-push inflation occurred, and as it began to grow the U.S government’s use of expansionary monetary and fiscal policy were enacted. These policies have prevented the U.S economy from entering a deep recession, but may lead to stagflation due to repeating health shocks and a constant need of supervision over expected inflation.

Keywords: Coronavirus recession, Cost-push inflation, stagflation

JEL Classification: E31, E32, E52