An Unprecedented Recession Ends a Prolonged Expansion
COVID-19 causes the first downturn since the Great Recession of 2007–2009.
Between the end of World War II and the dawn of 2020, the United States experienced 12 recessions.1 Then, just weeks into the new year, the 13th was just beginning.2 The COVID-19 recession, which began in February 2020, would end the longest period of economic expansion in U.S. since 1854.3
“The usual definition of a recession involves a decline in economic activity that lasts more than a few months,” the National Bureau of Economic Research (NBER) wrote in June 2020. “However, in deciding whether to identify a recession, the committee … concluded that the unprecedented magnitude of the decline in employment and production, and its broad reach across the entire economy, warrants the designation of this episode as a recession, even if it turns out to be briefer than earlier contractions.”3
Claire Starry, a contributing faculty member in Walden University’s online Master of Business Administration (MBA) degree program, calls the economy’s contraction “staggering.”
“According to the Bureau of Labor Statistics (BLS), between February and April 2020 the economy lost nearly 21 million payroll jobs, plus an additional 4 million job losses for non-payroll workers such as self-employed and gig workers,” she says. “The official unemployment rate rose to 14.7% and a broader measure of unemployment reached 22.8% in April 2020.”
By comparison, 8.7 million U.S. workers lost their jobs during the Great Recession of 2007–2009.4 But each recession has its own set of determinants and characteristics. Starry, who has a PhD in economics from the University of Washington, highlighted some of the COVID-19 recession’s impacts based on data from the Department of Commerce, Bureau of Economic Analysis:5
- Gross domestic product (GDP): According to the Bureau of Economic Analysis, GDP (measured in a seasonally adjusted, annual basis) fell by $2 trillion between the fourth quarter of 2019 and the second quarter of 2020. “Consumer spending and retail sales collapsed,” Starry says. “Several major corporations announced bankruptcies. The overall contraction could have been much worse if it wasn’t mitigated by massive government transfer payments amounting to 10% to 15% of GDP.”
- Personal income: Based on her review of the Bureau of Economic Analysis data, Starry says, “Even as the U.S. economy contracted at an annualized rate by 5% in first quarter and 31% in second quarter 2020, personal income grew, due to a massive infusion of transfer payments. The increases in government transfer payments more than offset declines in personal income from other sources, including wage and salary, proprietors’, dividend, and interest incomes.”
- Consumer spending: Starry highlights “another unusual trend” from the Bureau of Economic Analysis data: declining consumer spending even as personal income rose. “Between February and April 2020, personal consumption expenditures fell by nearly 19%,” she says. “As of August 2020, consumer spending was about 3.4% below its February peak, while personal income was about 2% higher.”
The Great Recession of 2007–2009 hit jobs in the manufacturing industry the hardest.6 During the COVID-19 recession, the dining, retail, and travel categories have been hardest hit.7 And as COVID-19 shut down commerce throughout the U.S., low-wage earners were most impacted, according to data provided by the U.S. Department of Labor Bureau of Labor Statistics.
According to research conducted by Raj Chetty of Harvard University, wage earners making less than $27,000 per year lost more than three times the number of jobs lost by those earning $60,000 or more per year. Nearly 40% of households with incomes below $40,000 reported a job loss in March 2020. Once the economy started to open, most top-paid workers were able to continue or return to work, while the bottom half of American workers accounted for about 80% of job losses.8
Social Service Impacts
One telltale sign of a recession’s economic impact on a portion of the U.S. workforce is an increased need for food assistance. According to Feeding America, a leading hunger relief organization, after the Great Recession, “It took 10 years for food insecurity rates to return to pre-Great Recession levels.”9
According to an article by Megan VerHelst, more than 54 million Americans were projected to experience food insecurity by the end of 2020—17 million more people than before the coronavirus outbreak.10
Starry concludes: Based on estimates of households with food insecurity, about a quarter or more of households are still deeply and adversely affected by the recession. Economic recovery for them is likely to be prolonged and stressful, even as the overall level of GDP returns to a pre-pandemic level. Food insecurity, especially among low-income families with children, urgently needs to be addressed.
An MBA Degree Highlighting Social Change
As countries around the world rebuild their economies and mend their social safety nets, they will need exceptional business executives to lead the way. Walden University’s online MBA program confers today’s most relevant business skills and knowledge to help you become expert in your field. And Walden’s commitment to advancing positive social change can help take you further still. In your online graduate degree program, you’ll learn to evaluate how business administration knowledge and skills enable a variety of stakeholders to contribute to positive social change.
Walden’s MBA degree program, which is accredited by the Accreditation Council for Business Schools and Programs, gives you the choice of nine optional specializations so you can more closely align your studies with your professional objectives. Elevate your business knowledge in Walden’s General Program or choose a specialization in Leadership, Human Resource Management, Corporate Finance, Marketing, Entrepreneurship and Small Business, Healthcare Management, Accounting, Project Management, or a Self-Designed option.
As a working professional with a full family and work life, you may be wondering, how long does it take to get an MBA? With Walden’s online MBA degree program, that depends on you. You can follow the standard track and work at a traditional pace. With the fast-track option, some people complete their online MBA program in as little as 12 months by doubling up on courses. No matter which path you choose, you’ll have the flexibility to log in to your MBA program coursework where and when it’s convenient for you.
Walden offers an online MBA without a GMAT, basing admission requirements on your professional and academic experience. So, if earning an advanced business degree is part of your career and life plan, Walden’s online MBA program may offer just the path you need to become a top-ranked business leader.
Walden University is an accredited institution offering an online Master of Business Administration degree program with multiple specializations. Expand your career options and earn your degree in a convenient, flexible format that fits your busy life.
5Source : www.bea.gov
Walden’s BS in Business Administration, Master of Business Administration (MBA), Doctor of Business Administration (DBA), and PhD in Management programs are accredited by the Accreditation Council for Business Schools and Programs (ACBSP). The MS in Accounting and BS in Accounting programs are also accredited by the ACBSP and have earned the organization’s separate accounting accreditation.
Walden University is accredited by The Higher Learning Commission, www.hlcommission.org.