The COVID-19 Recession Officially Ended Before Biden Took Office
By Eugene Kiely
Posted on October 18, 2021
The recession caused by the COVID-19 pandemic officially lasted just two months and ended in April 2020. But Transportation Secretary Pete Buttigieg wrongly credited President Joe Biden for guiding “this economy out of the teeth of a terrifying recession.”
Buttigieg made his remarks on CNN’s “State of the Union,” while answering a question about the supply chain disruptions that have caused delays in the delivery of consumer goods. The transportation secretary responded by saying high consumer demand — which has caused bottleneck delays at U.S. shipping ports — is a sign of a strengthening economy.
Buttigieg, Oct. 17: Demand is off the charts. Retail sales are through the roof. And if you think about those images of ships, for example, waiting at anchor on the West Coast, you know, every one of those ships is full of record amounts of goods that Americans are buying, because demand is up, because income is up, because the president has successfully guided this economy out of the teeth of a terrifying recession.
It’s true Biden inherited a weakened economy not fully recovered from the recession. As we noted in our story “What President Biden Inherits,” the newly inaugurated president on Jan. 20 took over an “economy struggling with 10 million jobless and millions more out of the workforce.”
In September the number of people with jobs was still about 5 million below the pre-recession peak, according to the Bureau of Labor Statistics.
But Biden didn’t guide the U.S. “out of the teeth of a terrifying recession.”
Technically, economists put the end of the recession — and the start of the current expansion of business activity — nine months before Biden took office.
The National Bureau of Economic Research’s Business Cycle Dating Committee determined that the COVID-19-induced recession lasted just two months — from March through April 2020 — making it the shortest recession on record.
Previously, the shortest recession on record occurred during the first six months of 1980. The NBER committee said its traditional definition of a recession is one that lasts more than a couple of months, but the circumstances last year were unique.
“[T]he committee concluded that the unprecedented magnitude of the decline in employment and production, and its broad reach across the entire economy, warranted the designation of this episode as a recession, even though the downturn was briefer than earlier contractions,” the NBER committee said, explaining the recent recession.
The NBER determines recessions based on economy-wide measures of economic activity, which reached a low point in April 2020. “May 2020 was the first month of the subsequent expansion,” the NBER committee said in its July release.
One key measure considered by the NBER when determining U.S. business cycles is real personal income excluding transfers, such as government benefits from the COVID-19 stimulus programs.
“The deduction of transfers is necessary because transfers are included in personal income but do not arise from production. This measure reached a clear trough in April 2020,” the NBER committee said in a statement on the end of the recession. (See the Federal Reserve Bank of St. Louis chart below that shows the steep decline in income from production in April 2020.)
Real personal income excluding transfers hasn’t quite fully recovered, but it was on its way to a full recovery by the time Biden took office. Other economic measures, too, saw relatively swift — but not full — recoveries.
After two quarters of economic contraction, the Bureau of Economic Analysis estimated that the nation’s economy grew 33.8% in the third quarter of 2020 and 4.5% in the fourth, when Donald Trump was president. And the unemployment rate – which was 14.8% in April 2020 – was 6.3% when Biden took over.
The unemployment rate has continued to recover, falling to 4.8% as of September, still a bit higher than the pre-recession rate of 3.5%.
Like anyone else, Buttigieg is entitled to his opinion on Biden’s handling of the economy. But he’s wrong to say the president “successfully guided this economy out of the teeth of a terrifying recession.” It was over before Biden took office.
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