Recession shapes or recovery shapes are used by economists to describe different types of recessions and their subsequent recoveries. There is no specific academic theory or classification system for recession shapes; rather the terminology is used as an informal shorthand to characterize recessions and their recoveries. The most commonly used terms are V-shaped, U-shaped, W-shaped, and L-shaped recessions, with the COVID-19 pandemic leading to the K-shaped recession. The names derive from the shape the economic data – particularly GDP – takes during the recession and recovery.
V-Shape: US 1953 recession Percent Change in Real GDP (annualized; seasonally adjusted); Average GDP growth 1947–2009 Source: BEA
U-Shape: US 1973–75 recession Percent Change in Real GDP (annualized; seasonally adjusted); Average GDP growth 1947–2009 Source: BEA
W-Shape: US 1980–82 recession. Percent Change in Real GDP (annualized; seasonally adjusted); Average GDP growth 1947–2009 Source: BEA
L-Shaped: Lost Decade in Japan. Percent Change in Real GDP (annualized; seasonally adjusted); Average GDP growth 1950–2000 Source: Penn World Tables
The 1973–1975 recession or 1970s recession was a period of economic stagnation in much of the Western world during the 1970s, putting an end to the overall post–World War II economic expansion. It differed from many previous recessions by involving stagflation, in which high unemployment and high inflation existed simultaneously.
In the parlance of recession shapes, the Recession of 1973–75 in the United States could be considered a U-shaped recession, because of its prolonged period of weak growth and contraction. Percent change from preceding period in real gross domestic product (annualized; seasonally adjusted); Average GDP growth 1947–2009 Source: Bureau of Economic Analysis
