The Shape of The Recession Following COVID-19

Published: May 5, 2020 by Kelly Nguyen

The effects of the COVID-19 pandemic has created extreme volatility in the US markets. While the high unemployment rate and impact on the stock market can be attributed to the pandemic, there were signs that the economy was already headed for a downturn. In a recent webinar, Mohammed Chaudhri, Experian’s UK Chief Economist, stated, “Even in the absence of COVID-19, […] the consensus was that the US was going into a period of a slowdown. Talks of a recession were building and financial indicators all pointed to an inverse yield curve.” With a global recession on the horizon, economists are using different scenarios to forecast potential outcomes.

Chaudhri and his team of Experian economists mapped out four macroeconomic scenarios for economic recovery:

V-shape scenario: A scenario in which the U.S. is able to recover losses and is able to recover quickly – possibly within 3 months. The impacts of strict lockdowns and social distancing may allow for a V-shape recovery. This V-shape follows previous pandemics and is the most likely outcome.

Delayed V-shape scenario: A scenario in which the economy bounces back (albeit much slower than a regular V-shape). This may occur as various states slowly lift their lockdown guidelines and return to business as usual. This delay can be caused by regulations and guidelines that vary from state to state.

U-shape scenario: A scenario in which the U.S. is unable to return to pre-COVID-19.

W-shape scenario: A scenario that is much more serious than a U-shape and has the greatest impact on the economy. This can occur if the state lockdowns are lifted too early and a reemergence of the virus occurs.

In our latest on-demand webinar, our experts discuss current trends which are indicative of emerging patterns and highlight economic forecasts that show some immediate concentrations of risk and exposure and the implications for your organization. Take a deeper dive into the latest data insights relating to the credit economy, and specifically, the impact brought by COVID-19.

Explore the macroeconomic outlook, including:

  • The immediate and near-term economic impact
  • Views on how a downturn could impact consumers’ affordability and emerging signs of vulnerability
  • Views on what KPIs you should focus on

Watch the webinar

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