How This Recession Is Different from the Last One

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Are all recessions created equal? Sort of. When we’re in a recession, economic activity drops, businesses pull back and unemployment starts to climb. But look a little closer and you’ll see recessions and their recoveries aren’t always the same.

There are some similarities to 2008’s Great Recession, including retail taking a big hit and unemployment climbing higher. Back in the 2000s, peak unemployment hit 10 percent, and CNBC notes that overall retail space retreated by about 87 million square feet.

In 2020, more than 40 million people filed for unemployment benefits by the end of May. The New York Times said this is about 25% of workers since March and is a tally that “rivals the bleakest years of the Great Depression.” As for retail, brick-and-mortar shopping was hurting even before the coronavirus. 

This recovery may look a little different. Some of the businesses that are thriving now in the US didn’t exist until recently. Think conferencing software that makes it easier for teams to work remotely and streaming at-home fitness platforms.

These are bright spots, but as with any good economic recovery news of late, a healthy mix of caution and optimism is understandable.

Even Fed Chairman Jerome Powell, who told Congress in June that “we have entered an important new phase and have done so sooner than expected” in noting a pick-up in spending and job growth, remains measured about the long term. “While this bounceback in economic activity is welcome, it also presents new challenges – notably, the need to keep the virus in check.”

Globally, the recovery may be going green. Clean tech has a major role to play in the upcoming economic recovery according to Goldman Sachs Research.

Climate spending has emerged as a potential pillar of Europe’s economic recovery plan, and countries globally are looking to green investment as a solution for economic revival, meeting their commitments under the Paris Agreement, and satisfying demand for action on climate change.

Goldman Sachs researchers estimate this focus could fuel $1 to $2 trillion per year in green infrastructure investment to 2030. They also estimate that green infrastructure is up to three times more labor intensive than traditional energy development, with the potential to create 15 to 20 million energy jobs worldwide over the same timeframe.

This article is for informational purposes only and is not a substitute for individualized professional advice. This article was prepared by and approved by Marcus by Goldman Sachs, but does not reflect the institutional opinions of Goldman Sachs Bank USA, Goldman Sachs Group, Inc. or any of their affiliates, subsidiaries or division. Goldman Sachs Bank USA is not providing any financial, economic, legal, accounting, tax or other recommendation in this article. Information and opinions expressed in this article are as of the date of this material only and subject to change without notice.  Information contained in this article does not constitute the provision of investment advice by Goldman Sachs Bank USA or any its affiliates. Neither Goldman Sachs Bank USA nor any of its affiliates makes any representations or warranties, express or implied, as to the accuracy or completeness of the statements or any information contained in this document and any liability therefore is expressly disclaimed.

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