COVID-19: Business Cycle

The COVID-19 pandemic triggered a unique business cycle, with a sharp contraction followed by an uneven recovery.

The COVID-19 pandemic triggered a unique business cycle, with a sharp contraction followed by an uneven recovery ๐Ÿ“‰๐Ÿ“ˆ

Let's break down each phase of the cycle ๐Ÿ‘‡

In the years leading up to 2020, the economy was in a steady expansion for over 10 years โ€“ the longest expansion phase in American history ๐Ÿ“ˆ

The economy reached its peak in February 2020, with the S&P 500 hitting a record high on Feb 19.

But under the surface, the COVID-19 virus was starting to spread quickly ๐ŸŒ

As lockdowns were imposed to slow the spread of the virus, the economy came to a screeching halt and entered a contraction phase ๐Ÿ“‰

GDP plunged 31% in Q2 2020, the fastest drop on record, and over 22 million jobs were lost in just 2 months ๐Ÿ˜ฑ

As COVID cases peaked in April, the stock market bottomed and the economy hit a trough ๐Ÿ“…

Policymakers sprung into action with massive fiscal and monetary stimulus to support the economy ๐Ÿ’ต

The recovery was swift but uneven, with some sectors bouncing back faster than others.

Tech stocks boomed as the world shifted online, while travel and hospitality lagged behind ๐ŸŒ

In 2021, the economic recovery gained steam as vaccines were rolled out and businesses reopened ๐Ÿ’‰

GDP grew 5.7% for the year, the fastest since 1984, and the S&P 500 hit record highs ๐Ÿ“ˆ

But in 2022-23, the recovery faced new challenges from high inflation, rising interest rates and banking turmoil ๐Ÿฆ

This led to a brief contraction phase in the beginning of 2022, which caused bear market in stocks and concerns about a potential recession on the horizon ๐Ÿ˜ฐ

However, GDP growth turned positive again in the 3rd quarter of 2022 and since then, the economy has once again entered a period of expansion ๐Ÿ“ˆ

Test your knowledge

Before 2020, the US economy was in its longest _____ in history.

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During the outbreak of COVID-19, US GDP plunged _____ in Q2 2020.

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Which of the following triggered economic recovery in 2020?

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In 2022-23, economic recovery faced challenges from:

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