Of course, the surviving companies in question above were otherwise healthy before whatever crisis struck. Solvency concerns do run high in the current environment, as no one truly knows how long global economies will remain shut due to the coronavirus, but odds are most survive, and activity will return in time. According to Bloomberg Intelligence, any 2020 economic downturn may be sharp, but short, and duration matters more than the depth for stocks.

Still, the time frame is “entirely dependent on the length of the shutdown,” wrote strategists including Gina Martin Adams.

Investors expecting to look past a quick recession may have longer to wait than they realize. Restrictions forced on the economy by virus-related measures will prolong its slump “through 2020 and much of 2021,” wrote Narayana Kocherlakota in a column for Bloomberg Opinion published Thursday. The former president of the Fed Bank of Minneapolis says the likely length of the downturn means governmental stimulus efforts need to be much more ambitious.

If history serves as a guide, a deep, yet brief recession would be rare. The average recession since World War II has lasted 11 months, according to LPL Financial, and the shortest ever was six months. The probability of a U.S. recession in the next 12 months jumped to 100% in March, a Bloomberg Economics model shows. If one began last month, then an average recession would would put the economy on track to climb out in February of 2021.

The market has a strong track record figuring out when a recession may end. Stocks bottomed an average of five months before downturns ended in 10 of the last 11 recessions, according to Luke Tilley, chief economist at Wilmington Trust Corp. and a former adviser with the Federal Reserve Bank of Philadelphia. He currently sees the U.S. economy starting to recover in the third or fourth quarter, meaning “stocks could start to price in that recovery and begin a sustainable rally relatively soon -- assuming the market has not yet bottomed,” he said.

An escape of a re-test of the stock market’s lows would be unparalleled, though, in Bank of America’s view, considering bear markets that coincide with economic downturns are strongly tied to their depth and length. The firm’s economists expect one of the deepest recessions on record, and equity strategists including Savita Subramanian see S&P 500 profits plummeting 29% this year to $115 a share.

Based on BofA’s models, it may take a few years for earnings to return to peak levels, but the snapback should be faster than usual considering quick and aggressive policy measures and a higher quality makeup of the S&P 500 as industries like software have grown more important and energy less so. During the financial crisis it took 17 quarters to recoup all lost earnings, and eight years after the Great Depression. The firm sees profits rising as much as 35% in 2021 to $155 a share.

“Markets will look through and forecast what they think are permanent impairment to earnings as opposed to short term, a couple of quarters of severe pressure on earnings,” said Matt Forrester, chief investment officer at BNY Mellon’s Lockwood Advisors. “How much damage is very up in the air, that’s why markets have had so much volatility. We’ll begin to get some assessment of that.”

--With assistance from Vildana Hajric and Claire Ballentine.

This article was provided by Bloomberg News.

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