After a recession hits its lowest point, or trough, the economy begins to grow again. But it can recover in a number of different ways. It can bounce back immediately, it can bounce back and then dip again, or it can remain near the low point and take years to fully recover its former levels of output.
As letters become an increasingly popular way to describe different recoveries, their ranks have grown from the original V-shape and U-shape to include a W-shape, L-shape, and K-shape. Blink and you might miss it: The V-shaped recovery involves the shortest type of recession.In a V-shaped recovery, the economy experiences a sharp decline but then bounces back almost immediately to its pre-recession level.
Some economists also consider the recession of 2001 to exemplify a U-shaped recovery. While this recession was fairly brief and mild by economic indicators such as GDP, a plot of unemployment levels tells a different story. The number of people in full-time jobs stubbornly remained at a trough for several years, until 2005. The W-shaped recovery involves a double-whammy: a recession, then a mini-recovery, then a second recession.
The lack of ongoing fiscal support provided by the government after the initial collapse of the stock market and the economy due to the subprime mortgage crisisSplit personality: The K-shaped recovery encompasses two contradictory trends — a rebound for some groups, a regression for others.The K-shaped recovery is a bit different from the others. It's a relatively new term created to describe what economists see happening with the COVID-19 pandemic.
Rate & Deficit triggered recovery will be different than Growth infused..