After Two Years of Covid, the U.S. Economy Is Thriving. We Have the Great Recession to Thank.

Still, as with Wall Street’s meltdown, the pandemic had the potential to cause a downward economic spiral. At the beginning, experts debated whether the recovery would be V-shaped or L-shaped—whether the rebound would spring back quickly or drag on slowly for years. “There was nothing in the nature of the pandemic that would have prevented it from being the triggering event for a more rapid downturn,” Mason said. “The rapid bounce back we saw was not inevitable.” Had mass unemployment led to a huge loss of income, the crisis would have persisted as businesses that opened back up shut down all over again when customers failed to show up thanks to a lack of money in their pockets.

The real difference, instead, was the way the government responded. President Trump declared the country to be in a pandemic on March 13, 2020; by March 18, he had signed the Families First Coronavirus Response Act into law, and less than two weeks later he followed that with the Coronavirus Aid, Relief, and Economic Security Act. Combined, the two packages came to over $2 trillion in federal spending. The laws included $1,200 stimulus checks, a $600 per week increase in unemployment benefits that also expanded eligibility, more money for food assistance, and emergency paid leave. Congress then followed that up with the $900 billion Coronavirus Response and Relief Supplemental Appropriations Act in December 2020, and Democrats passed the $1.9 trillion American Rescue Plan Act in early 2021, which sent out another round of stimulus checks and expanded child tax credit payments. In total, Congress has approved over $5 trillion in aid over just the past two years, three times as much as during the entire Great Recession.

That kind of aggressive, quick action meant that even though an earth-shattering 23 million people filed for unemployment in one week of May 2020 alone—more than triple the highest number during the peak of the Great Recession—the government ensured that their incomes weren’t wiped out. As soon as the initial restrictions lifted, spending carried on, allowing many businesses to keep their doors open and payrolls intact. The emergency measures didn’t reach everyone: Undocumented immigrants weren’t eligible for much of the relief, and many people struggled to get the expanded unemployment benefits. The Black unemployment rate is still double the white rate. Even so, most Americans are actually better off financially now than before the pandemic began.