It was practically inevitable for a recession to occur. We can't just shut down the world's largest economy for months at a time and not expect there to not be some major consequences.
A recession is commonly defined as two consecutive quarters of declining gross domestic product — the broadest measure of the economy. Between January and March, GDP declined by an annualized rate of 5%.
But this is no ordinary recession. The combination of public health and economic crises is unprecedented, and numbers cannot fully convey the hardships millions of Americans are facing.
In April, more than 20 million American jobs vanished as businesses closed and most of the country was under stay-at-home orders. It was the biggest drop in jobs since record-keeping began more than 80 years ago. Claims for unemployment benefits skyrocketed and have still not recovered to pre-pandemic levels.
While the labor market has been rebounding since states began to reopen, bringing millions back to work, the country is still down nearly 15 million jobs since February. Next week's July jobs report is expected to show another 2.3 million jobs added. That would bring the unemployment rate down to 10.3% — still higher than during the worst period of the financial crisis.
But this recession, even though the second-quarter numbers are astronomic, it hasn't really felt like too bad thanks to the stimulus plan, the Paycheck Protection Program, and the boost in unemployment benefits. All of which we're about to get another round of.
To help put this into a little bit of a better perspective, try and look at the numbers from a little bit of a clearer picture.
That number doesn't actually reflect that we lost 32.9% of our GDP in the third quarter, it was actually a decline of 9.5% for Q2. Now, that number still isn't good, but it's not something that we can't come back from. The 32.9% represents that if we maintained at the same rate for 12 months, what it would look like, so it is a bit deceptive in a way.
Nonetheless, it's still a recession.