It only took a few weeks for economists to agree that sweeping shutdowns to contain the spread of the novel coronavirus had plunged the US economy into a recession.
Now, just two months since the first stay-at-home orders began, the ensuing downturn has surpassed the Great Recession that spanned 18 months between 2007 and 2009.
"It just goes to show you how quickly the current crisis has evolved and how deep it is," Daniel Zhao, an economist at Glassdoor, told Business Insider. The size and scope of the crisis is very unusual for any kind of quick disruption to the economy, he added.
There has been an overwhelming amount of data showing the full scope of economic pain: millions of Americans have filed for unemployment insurance claims, millions of jobs have been erased, and consumer spending, retail sales, and production have plummeted by record amounts.
The hit to the labor market has been particularly extreme amid shutdowns to contain COVID-19. It only took four weeks for the coronavirus downturn to erase all jobs created since 2009, and nine weeks for unemployment insurance claims to surpass the total filed during the Great Recession — an 18-month span.
In addition, the unemployment rate jumped in April from a 50-year low in February to the highest since the Great Depression of the 1920s and 1930s. And economists think it will be even higher in May's nonfarm payroll report.
Apples to OrangesIt makes sense to compare the coronavirus-induced downturn to the Great Recession, as it's the most recent major economic event, Lindsey Piegza, chief economist at Stifel told Business Insider.
"No one really has the memory to think back to the eighties or the Great Depression," said Piegza. "So really the comparison that the market's going to be using is how bad is this relative to the financial crisis — that's the paradigm that we live in."
Still, there are some key differences between the coronavirus-induced downturn and the Great Recession. The US made the decision to shut of the economy to deal with a health event, unlike the Great Recession, which was caused by the financial crisis.
"This current crisis is not due to something structurally wrong with the economy," Zhao said. "It wasn't caused by a housing bubble or financial crisis."
The optimistic case is thus that activity and demand should rebound once the economy is back open, according to Zhao.
"If businesses and workers can be helped through the public health crisis, then hopefully they would be able to resume normal economic activity quickly on the other side, and we could actually recover faster than we did after the Great Recession," he said.
Ryan Sweet, a senior economist at Moody's, said comparing the coronavirus pandemic to the Great Recession is "apples to oranges."
"I think this is more similar to a natural disaster," Sweet told Business Insider. He sees similarities in the current hit to the labor force and what happened to workers following Hurricane Katrina, Hurricane Rita, and Superstorm Sandy.
Some things are not identical to a natural disaster such as Hurricane Katrina, Sweet said. There hasn't been massive destruction of capital stock such as homes and businesses, and thousands of people haven't been physically displaced.
But in terms of the economy, "the labor force did fall sharply in New Orleans and Louisiana right after Hurricane Katrina and Rita," he said. "So I would expect something similar."
The many shapes of potential recoveryEven though many states across the country have begun to reopen their economies from lockdowns, the US is still solidly in the period expected to show the depth of the impact from the pandemic. Economists forecast the sharpest drop in US gross domestic product in the second quarter, which spans April through June.
Now, economists are watching incoming data for two things — signs that indicators have reached their worst levels, or that they are starting to rebound.
The faster that the US economy does rebound will mean a shorter recession, classified by the National Bureau of Economic Research as a "significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales."
The bulk of the economic damage was expected to hit in the second quarter, which spans the months April through June. Economists will continue to watch data as its released to get a full picture of the situation and to gauge what a potential recovery may look like.
Even as states begin to reopen their economies, there's a lot of uncertainty about the future. "I think it's still way too early to say what the shape and speed of the recovery will look like," said Zhao, adding that anyone who has assigned a letter shape to the recover is "overly confident."
He continued: "There are all kinds of things that could happen on the healthcare side, on the public health side, or on the policy side, that could all have enormous impacts on the economic recovery."
One thing that is key in any bets that economists and industry watchers do have about the potential recovery is the speed at which it might occur. While the rebound from the Great Recession was the longest on record, it was also very slow-moving.
How fast the US recovers from the current crisis depends on how much stimulus is put into the economy by the government, according to Heidi Shierholz, senior economist at the Economic Policy Institute.
"That is a choice," Shierholz said. "One of the things that made the recovery from the Great Recession so bad, so weak is that we state and local governments didn't get the aid that they needed to not have to make substantial cuts that hamstrung the economy."
Now, the federal government could keep the same thing from happening, according to Shierholz, by making sure people have benefits even though they aren't working and helping businesses stay afloat even if they aren't fully open.
If the government does those things, "when the economy does reopen, there'll be demand and confidence in the economy to get a quick bounce back," said Shierholz.
Listed below are five key measures and accompanying charts showing that the coronavirus-induced US economic downturn is worse than the one that accompanied the Great Recession.
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