The recession caused by the COVID-19 pandemic officially lasted only two months and ended in April 2020. But Transportation Secretary Pete Buttigieg mistakenly credited President Joe Biden with pulling “this economy out of the way. teeth of a terrifying recession â.
Buttigieg made his remarks on CNN’s ‘State of the Union’, while responding to a question about supply chain disruptions that have resulted in delays in the delivery of consumer goods. The Transportation Secretary responded by saying that strong consumer demand – which has caused delays in bottlenecks at U.S. shipping ports – is a sign of a strengthening economy.
Buttigieg, October 17: Demand is off the charts. Retail sales are exploding. And if you think of those pictures of ships, for example, waiting at anchor on the west coast, you know, each of those ships is full of record amounts of goods that Americans are buying, because the demand is up, because incomes are up because the president has managed to pull this economy out of a terrifying recession.
It is true that Biden inherited a weakened economy that has not fully recovered from the recession. As we noted in our article “What President Biden Inherits”, the newly appointed president on January 20 took over an “economy struggling with 10 million unemployed and millions more outside 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 did not pull the United States “out 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 only two months – from March to April 2020 – making it the shortest recession on record.
Previously, the shortest recession on record had occurred in the first six months of 1980. The NBER committee said its traditional definition of a recession is one that lasts more than a few months, but the circumstances of the last year were unique.
“[T]The committee concluded that the unprecedented scale of the decline in employment and output, and its wide impact throughout the economy, justified the designation of this episode as a recession, even though the downturn has been shorter than previous contractions, âthe NBER committee said, explaining the recent recession.
The NBER determines recessions based on economy-wide measures of economic activity, which bottomed out in April 2020. âMay 2020 was the first month of subsequent expansion,â said the NBER committee said in its July press release.
A key metric taken into account by the NBER when determining business cycles in the United States is actual personal income excluding transfers, such as government benefits from COVID-19 stimulus programs.
âThe transfer deduction is necessary because transfers are included in personal income but do not arise from production. This measure hit a clear low in April 2020, âthe NBER commission said in a statement on the end of the recession. (See the Federal Reserve Bank of St. Louis chart below which shows the sharp decline in production income in April 2020.)
Real personal income excluding transfers has yet to fully recover, but it was on track to fully recover by the time Biden took office. Other economic measures have also seen relatively rapid recoveries, but not complete.
After two quarters of economic contraction, the Bureau of Economic Analysis estimated that the country’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 continued to recover, falling to 4.8% in September, still slightly higher than the pre-recession rate of 3.5%.
Like everyone else, Buttigieg is entitled to his opinion on Biden’s handling of the economy. But he is wrong to say that the president “managed to pull this economy out of the teeth of a terrifying recession.” It was over before Biden took office.
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