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Now that we’ve logged 2 quarters of negative GDP growth (a rule of thumb to support the NBER’s official ruling that a recession started in 2020Q1), I think it’s time to formally name this recession.
I propose we call it the “Novel Recession.”
THIS TIME IS DIFFERENT. A thread:
I propose we call it the “Novel Recession.”
THIS TIME IS DIFFERENT. A thread:
Usually recessions are referred to by their years, but big ones get a special name: e.g. Great Recession. So why should this one be called the “Novel Recession”?
Deeper
Shorter (
)
DIFFERENT
Deeper Shorter () DIFFERENT
This novel recession is deeper: To quote @JedKolko: “no y-axis is safe”. Before today’s release, the y-axis on this graph only went down to minus 15%: https://fred.stlouisfed.org/graph/?g=tyzi
This novel recession is (hopefully) shorter: The recession may already have hit bottom. It may be a tough crawl back, but recession end dates are based on the trough, so this one could end up being the shortest on record for the US: https://www.nber.org/cycles.html .
This Novel Recession is DIFFERENT in so many ways, but notably it is the first services-led recession, which also means it is a “shecession” instead of a “mancession” https://www.nytimes.com/2020/05/09/us/unemployment-coronavirus-women.html
Some have suggested this is a depression rather than a recession. I think of depressions as both deep and long. If we see another drop so that we end up with a single long recession, or 2 separate recessions, or a wrenchingly slow recovery then I would call this a depression.
I am not the only one to have suggested “novel recession.” For example, JP Morgan https://www.institutionalinvestor.com/article/b1kr36qzhr9yp7/JPMorgan-Warns-of-Novel-Recession-as-Economic-Activity-Shuts-Off and MIT Technology review: https://www.technologyreview.com/2020/04/08/998785/stop-covid-or-save-the-economy-we-can-do-both/
Other names have been proposed. For example, @FrancisDiebold has called this the “pandemic recession”: https://www.nber.org/papers/w27482
Unfortunately, I fear that name will not not be unique. Some have called it the COVID recession, but that seems too specific for the naming convention.
Unfortunately, I fear that name will not not be unique. Some have called it the COVID recession, but that seems too specific for the naming convention.
One name I disagree with is the IMF’s use of “Lockdown” to describe the recession https://blogs.imf.org/2020/04/14/the-great-lockdown-worst-economic-downturn-since-the-great-depression/. Research shows that “COVID-19 Doesn't Need Lockdowns to Destroy Jobs,” e.g. https://www.nber.org/papers/w27264 , https://www.nber.org/papers/w27531 , and https://bfi.uchicago.edu/working-paper/2020-80/.
People also have a lot of interesting names for their predicted path of the recovery. There’s the letters: from the best-case V, through U, W, to the dreaded L. Then there’s the “swoosh” and the “reverse radical” https://fivethirtyeight.com/features/what-economists-fear-most-during-this-recovery/
I wish we were having a V-shaped recovery. Then maybe we would call this the “novel contraction” and debate if it should even be considered a recession. But it’s already lasted too long and spread too wide to avoid this being a very painful, novel recession. FIN
