Definition of U-Shaped Recession

What is a "U-Shaped Recession"?

Imagine that the letter U represents the growth of an economy.

In a U-shaped recession, an economy first goes through a sharp recession.

After that, instead of seeing a quick recovery (as is the case in a "V-shaped" recession), the economy stagnates and continues to decline for a period of time before finally recovering.

A "U-shaped" recession usually lasts in the neighborhood of 12-24 months.

Many economists feel as though the United States is currently battling its way through a "U-shaped recession".

Many of these economists feel as though the economy will begin to recover sometime in 2010. This would fit the criteria of a "U-shaped" recession, as we would have:

1. Sharp recession.
2. Long period of stagnant or negative growth.
3. Recovery 24+ months later.


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