Shapes of Economic Recovery
L–shaped recovery
- An L–shaped recovery is a type of recovery characterized by a slow rate of recovery, with persistent unemployment and stagnant economic growth.
- L-shaped recoveries occur following an economic recession characterized by a more-or-less steep decline in the economy, but without a correspondingly steep recovery.
V–shaped Recovery
- It is a type of economic recession and recovery that resembles a “V” shape in charting.
- It involves a sharp rise back to a previous peak after a sharp decline in these metrics.
- In a V-shaped recovery, an economy that has suffered a sharp economic decline experiences a fast and strong rebound.
- In this, it is assumed that incomes and jobs are not permanently lost and the economic growth recovers sharply.
U–shaped recovery
- A U–shaped recovery describes a type of economic recession and recovery that charts a U shape, established when certain metrics, such as employment, GDP, and industrial output sharply decline and then remain depressed typically over a period of 12 to 24 months before they bounce back again.
W-shaped Recovery
- A W-shaped recovery involves a sharp decline in these metrics followed by a sharp rise back upward, followed again by a sharp decline and ending with another sharp rise.
- The middle section of the W can represent a significant bear market rally or a recovery that was stifled by an additional economic crisis.
