What will the economy look like after the COVID recession?

Controlling COVID is essential to restoring the economy, Lisa Kahn says

In a typical recession in the US economy, most job losses are permanent. Only a small percentage are considered temporary, where a worker can reasonably expect to be called back.

“The shutdowns are not what have been driving the economic collapse; it’s the global pandemic.”

But Kahn, a professor of economics at the University of Rochester, says the COVID-19 recession is anything but typical.

Temporary unemployment reached a high of around 80% during the COVID-19 recession. That peak, from last May, declined as expected—until progress stalled in controlling the spread of the virus.

Rebutting assertions that lockdowns have put a drag on the economy, Kahn says, “The shutdowns are not what have been driving the economic collapse; it’s the global pandemic.”

While vaccinations are accelerating in many places, we live in a global economy. There is still a long way to go to get past the COVID recession. And when we do, the recovery may look different, too.

Kahn’s insights are based on a study in which she—along with fellow economists Eliza Forsythe of the University of Illinois, Fabian Lange of McGill University, and David Wiczer of Stony Brook University—documented the evolution of the labor market from mid-March through November 2020.

Here, Kahn explains the COVID-19 recession and what the world could look like in the future:

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