Definition of V-Shaped Recession
What is the definition of a V-shaped recession?
When it comes to recessions/depressions, there are basically four different kinds of downturns. You have:
a) the V-shaped recession
b) the W-shaped recession
c) the U-shaped recession
d) the L-shaped depression
Of the four, the V-shaped recession is the one most preferred by economists and government officials.
In a V-shaped recession, you have a quick downturn in the economy (think of the first half of the letter V), which is followed by a quick recovery (think of the second half of the letter V).
When it comes to a V-shaped recession, think "short and shallow".
Many policy makers in Washington had hoped that the "Great Recession" would be a V-shaped recession when the downturn started in late 2007.
However, things did not work out this way, as we are most likely working our way through a long U-shaped recession.
A good example of a V-shaped recession came in 2001-02.
In the aftermath of 9/11, the United States suffered through a recession.
The US economy quickly got back on the rails though, and the recession proved to be a short one.
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