jpm_asset_mgmt
  • Products

    Funds

    • Performance & Yields
    • Liquidity
    • Ultra-Short
    • Short Duration

    Solutions

    • Cash Segmentation
    • Separately Managed Accounts
    • Managed Reserves Strategy
    • Capitalizing on Prime Money Market Funds
  • Insights

    Liquidity Insights

    • Liquidity Insights Overview
    • Audio Commentaries
    • Case Studies
    • Leveraging the Power of Cash Segmentation
    • Cash Investment Policy Statement
    • China Money Market Resource Centre
    • PeerView Survey

    Market Insights

    • Market Insights Overview
    • Eye on the Market
    • Guide to the Markets
    • Market Updates

    Portfolio Insights

    • Portfolio Insights Overview
    • Currency
    • Fixed Income
    • Long-Term Capital Market Assumptions
    • Sustainable Investing
  • Resources
    • MORGAN MONEY
    • Account Management & Trading
    • Multimedia
    • Announcements
    • Total Return Comparison Calculator
  • About us
  • Contact us
Skip to main content
  • English
  • Role
  • Country
  • MORGAN MONEY LOGIN
Search
Menu
CLOSE
Search
You are about to leave the site Close
J.P. Morgan Asset Management’s website and/or mobile terms, privacy and security policies don't apply to the site or app you're about to visit. Please review its terms, privacy and security policies to see how they apply to you. J.P. Morgan Asset Management isn’t responsible for (and doesn't provide) any products, services or content at this third-party site or app, except for products and services that explicitly carry the J.P. Morgan Asset Management name.
CONTINUE Go Back
  1. Home
  2. Insights
  3. Market Insights Overview
  4. Market Updates
  5. On the Minds of Investors
  6. Is the recession over?

  • Share
  • LinkedIn Twitter Facebook
  • Email
  • Print
  • Actions
  • LinkedIn Twitter Facebook
    Email Print

Is the U.S. recession over?

07/22/2020

Jordan Jackson

Monthly data through May and June suggest the U.S. economy has already emerged from a recession.

Jordan Jackson

Listen to On the Minds of Investors

07/22/2020

Last month, the Business Cycle Dating Committee of the National Bureau of Economic Research—the “scorekeepers” of economic recessions and expansions in the U.S.—marked the peak month of the previous expansion in February 2020, officially marking an end to the longest expansion on record (128 months) dating back to 1854. While sweeping lockdowns across the U.S. in March and April crystalized the recession, the gradual yet bumpy reopening and rebound in economic activity begs the question: is the recession over?

While many assume an economic recession consists of two-quarters of negative GDP growth, the official definition for a recession is “a significant decline in economic activity spread across the economy, normally visible in production, employment and other indicators”. Given this, monthly data through May and June suggests the U.S. economy has already emerged from a recession.

In February, the unemployment rate was 3.5%, initial jobless claims were averaging less than 220k per week, consumer spending was rising at a healthy 3.1% y/y and manufacturing and services sectors were in expansion. In April—the month in which the economy appears to have bottomed—the unemployment rate lurched to 14.7%, jobless claims averaged 5 million per week, consumer spending fell by -16.3% relative to a year ago and manufacturing and service sectors fell into deep contraction. While a significant amount of damage was done to the economy over March and April, a rapid reversal in activity due to reopenings has helped contribute to a broad improvement, albeit from very depressed levels.

After plunging through April, retail sales jumped 7.5% in June on top of an 18.2% surge in May. Notably, sales in June were only 0.6% below that of February. Manufacturing output was up an impressive 3.8% in May and 7.2% in June. Elsewhere, after losing roughly 22 million jobs cumulatively through March and April, the U.S. has clawed back about 7.5 million jobs in May and June. Despite the strong recent data, the economy is still expected to contract by -35% q/q saar in the second quarter. However, recent momentum may continue through the third-quarter, which could bounce +20% q/q saar.

Broadly, it is evident that the self-induced social distancing recession in order to combat the spread of COVID-19 pulled the economy into one of the deepest recessions on record. However, the U.S. has likely already emerged from this recession after just a two-month period. The expansion and recession follows a trend in the U.S. of long summers and short winters, meaning economic expansions typically last much longer than recessions. Even so, going forward, the recovery will be much more gradual, and GDP may not pass its 2019 peak until at least late 2021.

Length of economic expansions and recessions 

Source: BEA, NBER, J.P. Morgan Asset Management. *Chart assumes most recent recession began in March 2020 and ended April 2020. Current expansion is assumed to begin in May 2020 and continued through June 2020, lasting 2 months so far. Data for length of economic expansions and recessions obtained from the National Bureau of Economic Research (NBER). These data can be found at www.nber.org/cycles/ and reflect information through June 2020. Past performance is not a reliable indicator of current and future results.
Guide to the Markets – U.S. Data are as of July 21, 2020.

0903c02a829770ef

EXPLORE MORE

On the Minds of Investors

What investment questions are on the minds of investors? Explore the questions investors ask frequently and find answers at J.P. Morgan Asset Management.

Read more

Guide to the Markets

The J.P. Morgan Guide to the Markets illustrates a comprehensive array of market and economic histories, trends and statistics through clear charts and graphs.

Read more

Asset Class Views

Get quarterly commentary and in-depth analysis on equities, fixed income and other asset classes, written by our senior investment teams.

Read more
Economy
J.P. Morgan Asset Management

  • Investment stewardship
  • About us
  • Contact us
  • Privacy policy
  • Cookie policy
  • Binding corporate rules
  • Sitemap
  • Accessibility
Decorative
J.P. Morgan

  • J.P. Morgan
  • JPMorgan Chase
  • Chase

READ IMPORTANT LEGAL INFORMATION. CLICK HERE >

The value of investments may go down as well as up and investors may not get back the full amount invested.

Copyright 2021 JPMorgan Chase & Co. All rights reserved.