A comparison of the current economic environment with past recessions speaks to the severity of the shock produced by the pandemic and the global efforts to contain it. I use the United States as my example in the illustration below, but the story is similar around the world. The shock to economic growth, and to employment as well, from pandemic-containment efforts make even the 2008 global financial crisis seem insignificant.
An unprecedented shock to U.S. GDP
Sources: U.S. Bureau of Economic Analysis. April 2020 data point is Vanguard’s forecast for second-quarter U.S. growth.
Yet comparisons with the Great Depression also seem inappropriate; its economic shock lasted four years. Instead, I might characterize this period as the “Great Fall.” Although the current shock is severe, recovery can begin sooner than with past recessions, once the biggest health risks are deemed to have passed sufficiently that businesses can resume operations.