How COVID-19 Has Affected the Recruitment Industry | Economists' Predictions on Recovery Time

Many organizations and businesses have been wondering when we can expect the economy to recover and what recovery is going to look like as time goes on. The answers to these questions will help organizations and businesses prepare and strategize for the future.

Back in April 2020, during the peak of COVID-19, the Wall Street Journal surveyed some of the leading economists across the U.S. to gain their perspective on what to expect in terms of economic recovery. The two questions they were asked were:

1. When do you expect the economic recovery to start?
2. What will the recovery look like and what will determine its shape?

Here’s what they said. 

Question 1: When do you expect the economic recovery to start?

A vast majority of the economists who participated in this survey expect the economy to begin recovering in Q3 (65.5%) or Q4 (19.7%). From these answers, we can infer that due to businesses reopening in Q3, the economy will be stimulated once again and recovery will start to take place.

Want to learn more about COVID-19’s effects on the recruitment industry? Download the replay of our webinar here - The Impact of COVID-19 on the Recruitment Industry: Current Analysis and Future Opportunities.

Question 2: What will an economic recovery look like and what will determine its shape?

For this question, economists were given 4 choices:

1. W-shaped: a double-dip recession that could occur due to another shut down or outbreak, followed by a rapid recovery
2. V-shaped: a sharp drop followed by a sharp rebound
3. U-shaped: a prolonged bottom that is relatively flat with no growth and a rapid recovery afterwards
4. L-shaped: no recovery at all for the foreseeable future

To put things into perspective, the recession of 2008 was an L-shaped recovery because it took the U.S. a long time to get back to previous levels. 

As of April 2020, most economists are predicting a V or U-shaped recovery. 47.1% of economists say the shape of recovery will be V-shaped - meaning a sharp drop followed by a sharp rebound. 45.1% are predicting a U-shaped recovery - meaning recovery with a prolonged bottom with no growth, but followed by a rapid recovery. Some good news is that only 3.9% (7.9% combined) of economists have predicted W or L-shaped recovery.

The factors that will determine recovery shape is all dependent on how states execute their reopening plans, which industries are able to resume hiring initiatives, and how many job seekers are willing to go back to work. 

As economists have studied different trends and compared this shut down to previous economic downturns, it’s helpful to organizations and businesses to prepare for what the future holds, allowing the C-suite to strategize their business plans and come up with solutions for all scenarios. 

Stay up-to-date with economic reports and pay attention to how the economy shifts to make sure you and your organization are prepared.

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