{"id":703,"date":"2020-04-21T15:20:00","date_gmt":"2020-04-21T15:20:00","guid":{"rendered":"http:\/\/phphouses.com\/blog\/?p=703"},"modified":"2022-07-04T23:46:31","modified_gmt":"2022-07-04T23:46:31","slug":"will-economic-crisis-v-u-l-shaped-recovery","status":"publish","type":"post","link":"https:\/\/phphouses.com\/blog\/will-economic-crisis-v-u-l-shaped-recovery\/","title":{"rendered":"Will This Economic Crisis Have a V, U, or L-Shaped Recovery?"},"content":{"rendered":"<div id=\"attachment_704\" style=\"width: 760px\" class=\"wp-caption aligncenter\"><img aria-describedby=\"caption-attachment-704\" decoding=\"async\" loading=\"lazy\" class=\"size-full wp-image-704\" src=\"http:\/\/phphouses.com\/blog\/wp-content\/uploads\/2020\/04\/20200421-KCM-Share.jpg\" alt=\"\" width=\"750\" height=\"410\" srcset=\"https:\/\/phphouses.com\/blog\/wp-content\/uploads\/2020\/04\/20200421-KCM-Share.jpg 750w, https:\/\/phphouses.com\/blog\/wp-content\/uploads\/2020\/04\/20200421-KCM-Share-300x164.jpg 300w\" sizes=\"(max-width: 750px) 100vw, 750px\" \/><p id=\"caption-attachment-704\" class=\"wp-caption-text\">Will This Economic Crisis Have a V, U, or L-Shaped Recovery?<\/p><\/div>\n<p>Many American businesses have been put on hold as the country deals with the worst pandemic in over one hundred years. As the states are deciding on the best strategy to slowly and safely reopen, the big question is:\u00a0<strong>how long will it take the economy to fully recover?<\/strong><\/p>\n<p>Let\u2019s look at the possibilities. Here are the three types of recoveries that follow most economic slowdowns (the definitions are from the financial glossary at\u00a0<a title=\"Market Business News\" href=\"https:\/\/marketbusinessnews.com\/\" target=\"_blank\" rel=\"noopener noreferrer\"><em>Market Business News<\/em><\/a>):<\/p>\n<ul>\n<li><strong>V-shaped recovery:<\/strong>\u00a0an economic period in which the economy experiences a sharp decline. However, it is also a brief period of decline. There is a clear bottom (called a trough by economists) which does not last long. Then there is a strong recovery.<\/li>\n<li><strong>U-shaped recovery:\u00a0<\/strong>when the decline is more gradual, i.e., less severe. The recovery that follows starts off moderately and then picks up speed. The recovery could last 12-24 months.<\/li>\n<li><strong>L-shaped recovery:<\/strong>\u00a0a steep economic decline followed by a long period with no growth. When an economy is in an L-shaped recovery, getting back to where it was before the decline will take years.<\/li>\n<\/ul>\n<h4><strong>What type of recovery will we see this time?<\/strong><\/h4>\n<p>No one can answer this question with one hundred percent certainty. However, most top financial services firms are calling for a V-shaped recovery. Goldman Sachs, Morgan Stanley, Wells Fargo Securities, and JP Morgan have all recently come out with projections that call for GDP to take a deep dive in the first half of the year but have a strong comeback in the second half.<\/p>\n<div id=\"attachment_705\" style=\"width: 1010px\" class=\"wp-caption aligncenter\"><img aria-describedby=\"caption-attachment-705\" decoding=\"async\" loading=\"lazy\" class=\"size-full wp-image-705\" src=\"http:\/\/phphouses.com\/blog\/wp-content\/uploads\/2020\/04\/20200421-MEM-Eng-1.jpg\" alt=\"\" width=\"1000\" height=\"850\" srcset=\"https:\/\/phphouses.com\/blog\/wp-content\/uploads\/2020\/04\/20200421-MEM-Eng-1.jpg 1000w, https:\/\/phphouses.com\/blog\/wp-content\/uploads\/2020\/04\/20200421-MEM-Eng-1-300x255.jpg 300w, https:\/\/phphouses.com\/blog\/wp-content\/uploads\/2020\/04\/20200421-MEM-Eng-1-768x653.jpg 768w\" sizes=\"(max-width: 1000px) 100vw, 1000px\" \/><p id=\"caption-attachment-705\" class=\"wp-caption-text\">Major Financial Institutions Calling for a V-Shaped Recovery<\/p><\/div>\n<h4><strong>Is there any research on recovery following a pandemic?<\/strong><\/h4>\n<p>There have been two extensive studies done that look at how an economy has recovered from a pandemic in the past. Here are the conclusions they reached:<\/p>\n<p><strong>1. John Burns Consulting<\/strong>:<\/p>\n<blockquote><p><em>\u201cHistorical analysis showed us that pandemics are usually V-shaped (sharp recessions that recover quickly enough to provide little damage to home prices), and some very cutting-edge search engine analysis by our Information Management team showed the current slowdown is playing out similarly thus far.\u201d<\/em><\/p><\/blockquote>\n<p><strong>2. Harvard Business Review:<\/strong><\/p>\n<blockquote><p><em>\u201cIt\u2019s worth looking back at history to place the potential impact path of Covid-19 empirically. In fact, V-shapes monopolize the empirical landscape of prior shocks, including epidemics such as SARS, the 1968 H3N2 (\u201cHong Kong\u201d) flu, 1958 H2N2 (\u201cAsian\u201d) flu, and 1918 Spanish flu.\u201d<\/em><\/p><\/blockquote>\n<p>The research says we should experience a V-shaped recovery.<\/p>\n<h4><strong>Does everyone agree it will be a \u2018V\u2019?<\/strong><\/h4>\n<p>No. Some are concerned that, even when businesses are fully operational, the American public may be reluctant to jump right back in.<\/p>\n<p>As\u00a0<em>Market Business News<\/em>\u00a0explains:<\/p>\n<blockquote><p><em>\u201cIn a typical V-shaped recovery, there is a huge shift in economic activity after the downturn and the trough. Growing consumer demand and spending drive the massive shift in economic activity.\u201d<\/em><\/p><\/blockquote>\n<p>If consumer demand and spending do not come back as quickly as most expect it will, we may be heading for a U-shaped recovery.<\/p>\n<p>In a\u00a0<a title=\"message\" href=\"https:\/\/www.ml.com\/articles\/market-volatility\/market-volatility-april-16-2020.html\" target=\"_blank\" rel=\"noopener noreferrer\">message<\/a>\u00a0last Thursday, Chris Hyzy,\u00a0<em>Chief Investment Officer<\/em>\u00a0for\u00a0<em>Merrill and Bank of America Private Bank<\/em>, agrees with other analysts who are expecting a resurgence in the economy later this year:<\/p>\n<blockquote><p><em>\u201cWe\u2019re forecasting real economic growth of 30% for the U.S. in the 4th quarter of this year and 6.1% in 2021.\u201d<\/em><\/p><\/blockquote>\n<p>His projection, however, calls for a U-shaped recovery based on concerns that consumers may not rush back in:<\/p>\n<blockquote><p><em>\u201cAfter the steep plunge and bottoming out, a \u2018U-shaped\u2019 recovery should begin as consumer confidence slowly returns.\u201d<\/em><\/p><\/blockquote>\n<h3><strong>Bottom Line<\/strong><\/h3>\n<p>The research indicates the recovery will be V-shaped, and most analysts agree. However, no one knows for sure how quickly Americans will get back to \u201cnormal\u201d life. We will have to wait and see as the situation unfolds.<\/p>\n<p><strong>Contact us:<\/strong><br \/>\nPHP Houses<br \/>\n142 W Lakeview Ave<br \/>\nUnit 1030<br \/>\nLake Mary, FL 32746<br \/>\nPh:\u00a0<span id=\"gc-number-1\" class=\"gc-cs-link\" title=\"Call with Google Voice\">(407) 519-0719<\/span><br \/>\nFax:\u00a0<span id=\"gc-number-2\" class=\"gc-cs-link\" title=\"Call with Google Voice\">(407) 205-1951<\/span><br \/>\nemail:\u00a0info@phphouses.com<\/p>\n<p><strong>Let\u2019s Connect:<\/strong><br \/>\n<a href=\"https:\/\/www.facebook.com\/WeBuyHousesCentralFlorida\/\">Facebook<\/a><br \/>\n<a href=\"https:\/\/www.linkedin.com\/in\/walter-diloreto-25403710\/\">Linkedin<\/a><br \/>\n<a href=\"https:\/\/twitter.com\/WalterDiLoreto\">Twitter<\/a><br \/>\n<a href=\"https:\/\/www.instagram.com\/wdiloreto\/\">Instagram<\/a><\/p>\n<h6><em>THE INFORMATION PRESENTED IN THIS ARTICLE IS FOR EDUCATIONAL PURPOSES ONLY AND SHOULD NOT BE CONSIDERED LEGAL, FINANCIAL, OR AS ANY OTHER TYPE OF ADVICE.<\/em><\/h6>\n","protected":false},"excerpt":{"rendered":"<p>Economic Recovery <a class=\"continue\" href=\"https:\/\/phphouses.com\/blog\/will-economic-crisis-v-u-l-shaped-recovery\/\">Finish Reading<span> Will This Economic Crisis Have a V, U, or L-Shaped Recovery?<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[69],"tags":[15,123,164,149,152,132,10,18,9,49,42,23,63,48,165,17],"_links":{"self":[{"href":"https:\/\/phphouses.com\/blog\/wp-json\/wp\/v2\/posts\/703"}],"collection":[{"href":"https:\/\/phphouses.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/phphouses.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/phphouses.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/phphouses.com\/blog\/wp-json\/wp\/v2\/comments?post=703"}],"version-history":[{"count":1,"href":"https:\/\/phphouses.com\/blog\/wp-json\/wp\/v2\/posts\/703\/revisions"}],"predecessor-version":[{"id":706,"href":"https:\/\/phphouses.com\/blog\/wp-json\/wp\/v2\/posts\/703\/revisions\/706"}],"wp:attachment":[{"href":"https:\/\/phphouses.com\/blog\/wp-json\/wp\/v2\/media?parent=703"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/phphouses.com\/blog\/wp-json\/wp\/v2\/categories?post=703"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/phphouses.com\/blog\/wp-json\/wp\/v2\/tags?post=703"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}