The Shapes Of Recessions And Recoveries – Will It Be A ‘V’ Or A ‘K’?
Recessions – typically defined as two consecutive quarters of declining economic output – are always painful in terms of how they affect our economic well-being. Like all bad things, fortunately, they eventually end and a recovery begins.
But not all recoveries or recessions look the same. And economists have a tendency to compare their varying paths with letters of the alphabet.
For example, during the current situation, you may have the heard the direction the recovery might take compared with a “V,” a “W” or even a “K.”
As a macroeconomist, I know this alphabet soup can be confusing for a lay reader. So here’s a guide to some of the most commonly used letters.
‘V’ for victory
While recessions are never a good thing, the “V-shaped” recovery is deemed the best-case scenario. In a reces...