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Illustration: Aïda Amer/Axios

It's not a U, it's not an L, and it's definitely not an I. America's economic recovery from the coronavirus shutdown has already started. In economists' shorthand, that means it's a V (a sharp rebound), a W (a nasty double-dip), or, most likely, something in between.

Why it matters: The shape of the recovery will directly affect the future of millions of unemployed Americans. It will also determine whether small business owners, in particular, will be able to restart their entrepreneurial careers after being forced to shut down during the pandemic.

Context: One big fear in March and April was that America would see no real economic recovery so long as the pandemic remained out of control. In May, however, we saw more than 40,000 deaths from COVID-19 — and we had the largest monthly employment gain in American history, with 2.5 million new jobs being created.

  • Be smart: The consensus among economists is now that we'll see a "reverse radical" recovery. Think of a backwards square-root sign, where there's a sharp drop, a relatively small bounce back, and then a long period of subpar growth.

The best-case scenario is a V. White House economic adviser Larry Kudlow, for one, is sure the economic recovery will last: "I think we're off to the races in what will be a very strong V-shaped recovery," he said this week.

  • The case for a V is based on the idea that even if the number of new coronavirus cases is remaining stubbornly high, the number of new coronavirus deaths is falling steadily. So long as that trend remains in place, the U.S. economy is likely to continue to move back toward some semblance of normality.

The worst-case scenario would be a "W." Federal Reserve vice chair Randal Quarles is telling banks to prepare for "a W-shaped double dip recession with a short-lived recovery followed by a severe drop in activity later this year due to a second wave of containment measures."

  • While virus-related lockdowns remain the biggest risk, economists also worry about the fact that May's surprisingly good economic data were driven in large part by hundreds of billions of dollars of temporary government stimulus.
  • The $1,200 checks, along with an extra $600 per week for anybody claiming unemployment assistance, actually caused personal incomes to rise in April.
  • If and when the free money runs out, the mini-boom could be over. At that point we could fall back into a "W-shaped" recovery — or even a double-dip recession.

By the numbers: According to BofA Securities' global fund manager survey, the proportion of investors expecting a V-shaped recovery rose from 10% in April to 18% in May — but was still dwarfed by the proportion expecting a U-shaped or W-shaped recovery, which fell from 75% in April to 64% in May.

Reality check: Many major industries, from live entertainment to air travel and even in-person shopping, remain in a dire economic condition. They still have no real visibility for when or how they might return to a pre-pandemic state of health.

  • International trade is looking very weak. Borders went up quickly once the virus hit, and will go down much more slowly.
  • State and local governments also seem certain to lay off millions more workers in the coming months, given the unprecedented magnitude of their budget crunch.

The bottom line: "We don't have a word for being in a depressed economy that's growing," says Heidi Shierholz, senior economist at the Economic Policy Institute.

  • Even a fast recovery will take place amid double-digit unemployment rates and the shuttering of millions of small businesses. That's nothing to celebrate.

Go deeper

U.S. economy added 661,000 jobs in September

Data: Bureau of Labor Statistics; Chart: Axios Visuals

The U.S. economy added 661,000 jobs in September, while the unemployment rate fell to 7.9% from 8.4%, the government said on Friday.

Why it matters: The final jobs report before the election showed a slowdown in hiring — a sign the labor market is in for a longer road to recover from the coronavirus pandemic.

The Trump jobs record

Data: U.S. Bureau of Labor Statistics via FRED; Chart: Andrew Witherspoon/Axios

The final glimpse of the labor market before election day comes this morning, and it’s expected to show job growth continuing at a slower pace.

Why it matters: President Trump, who is using his record on the economy as a key message on the campaign trail, heads into election with a labor market that has been ravaged by the pandemic and is still millions of jobs in the hole.

In photos: Life slowly returning to normal as restrictions lift across U.S.

Fireworks near the Statue of Liberty in New York City marking the end of New York State's pandemic restrictions in New York State and honoring frontline workers. Photo: Tayfun Coskun/Anadolu Agency via Getty Images

New Yorkers and Californians celebrated most COVID-19 restrictions lifting on Tuesday, as the two states became the latest to move toward fully reopening their economies.

The big picture: The pandemic has now claimed over 600,000 lives in the U.S., but vaccines have helped drive down the seven-day average to roughly 14,000 new cases and fewer than 400 deaths per day, helping most states to ease restrictions.