Economic Recovery from the COVID-19 Recession: Does This Time Differ?

Abstract

The 2020 COVID-19 economic recession has differed from past recessions when comparing macroeconomic factors such as unemployment rate, industrial growth, and inflation. By creating and analyzing data sets with these factors overlaid onto the business cycles ranging from 1948 to 2021, the COVID recession showed negative spikes in the former two rates whilst inflation rose during the period; this breaks the recurring pattern of low inflation during a recession once more. Upon such an analysis, it is inferred that the COVID recession showed a short but more significant economic impact through directly affecting the labor market. In natural response, the U.S government enacted expansionary monetary and fiscal policy. These policies have prevented the U.S economy from entering a deep recession but can lead to stagflation due to the possibility of repeating health and labor shocks together with associated cost-push shocks.