Record collapse in GDP

[Stevicus]

Record collapse in GDP points to challenges for economic recovery — and Trump

WASHINGTON —



U.S. economic output fell at a stunning 32.9% annual rate in the second quarter — a level not seen since the Great Depression and by far the largest drop since government record-keeping began in 1947, according to data released Thursday.

The sharp contraction, reflected in the government’s report of gross domestic product, came on the heels of a 5% decline in GDP during the first quarter and marked what most economists predict will be the bottom of the coronavirus-induced recession that officially began in February. The new numbers on GDP — the sum of all goods and services produced in the country — include data from the mini-recovery that occurred before the latest surge in the COVID-19 pandemic.

Now with the coronavirus rampaging over large areas of the country, measures of consumer spending, small-business activity and job openings are slowing again, casting a shadow over economic conditions many Americans will face as election day draws near.

A separate report Thursday from the Labor Department showed new unemployment claims rose last week to 1.43 million. It was the second straight week of increase — following about three months of steady declines — and brought the total number of people who have applied for jobless benefits since mid-March to more than 54 million, which is about a third of the American labor force.

The $3 trillion relief package earlier this year helped to ease the pain a little bit, but that's starting to run out.

The nearly $3 trillion worth of pandemic relief measures approved earlier by Congress have clearly buoyed the economy, but the effect of those initial programs is ebbing.

Many small businesses are running out of loans and grants that kept paychecks going out to at least some workers. State governments are financially distressed. And millions of jobless workers will see their enhanced unemployment benefit checks end this week.

Federal Reserve Chairman Jerome H. Powell said Wednesday that additional fiscal support is “essential” for the recovery. He spoke particularly about the hardship of unemployment, which has fallen disproportionately on minorities, women and low-wage workers in service industries such as hotels, restaurants and entertainment venues.

Forecasters say the next quarter will see a 19% rise, but it won't really be felt on the ground. Even if everything goes back to "normal," a lot of workers will find that they won't be able to go back to their old jobs, because there will be few of them to go around. They forecast that unemployment will remain in double digits through the fall.

“Many of those people are going to find it hard [that] they can’t go back to their old job. There won’t be enough jobs for them. So I think those people are going to need support,” he said during a remote news conference. “I can’t say what the exact level should be. It is not our role. But they are going to need support if they are to be able to pay their bills, to continue spending money, to remain in their current rental house or apartment or house if they own it.”

The forecasting firm IHS Markit is predicting the third quarter will grow at a 19.1% annual rate. But as much as that may represent a substantial rebound, analysts said that’s not what many people on the ground will be feeling. The unemployment rate was 11.1% in June and is likely to remain in double digits through the fall. Thus far, the economy has recovered only one-third of approximately 22 million jobs lost since February, and private-sector payrolls could have turned down again in July.

“We fell down a huge hole in March and April, and we were only able to climb partway out,” said Ethan Harris, head of global economics research at Bank of America Merrill Lynch. “The challenge is that we’re now entering a period where you’re kind of stuck at the halfway point with the economy starting to level off again.”

Unless the recovery falls off the rails, which few experts expect, the coronavirus recession could be one of the shortest in history, technically speaking. But the effects will be long-lasting.

The nonpartisan Congressional Budget Office doesn’t see real GDP recovering to its pre-pandemic level until the middle of 2022, and it’ll probably be years after that before the economy returns to full employment.

This could all go very badly for Trump in November.

For Trump, the pandemic has undercut his plan to campaign for reelection on the strength of the economy. Since the pandemic began, he has fallen well behind former Vice President Joe Biden, the presumptive Democratic nominee, in national polls as well as in surveys of voters in some swing states.

In late February before the coronavirus outbreak swept the U.S., Trump and Biden were tied in the polls in Wisconsin, a state Trump won by a very narrow margin in 2016.

But by mid-June, Trump was running 8 points behind Biden in Wisconsin, with substantially more independent voters expressing disapproval of Trump’s handling of the COVID-19 pandemic than in the early days of the health crisis in March, according to the Marquette Law School Poll.

They're still arguing in Congress over a new $1 trillion relief package, although the Democrats in the House passed a $3 trillion spending bill. One of the sticky points is whether to extend the $600 per week unemployment supplement or whether it should be allowed to expire (which will happen this week).

They’ve proposed a $1-trillion package that includes slashing the $600 weekly federal add-on to state unemployment benefits; giving another round of $1,200 in cash to tens of millions of Americans; and offering billions of dollars in new aid to schools that reopen promptly this fall, as Trump has urged but COVID-19 experts have warned against.

But the plan isn’t nearly big enough or well-targeted to provide a strong boost, most economists said, and it faces stiff pushback from House Democrats, who earlier passed a $3-trillion proposal that includes allocating $1 trillion for state and local governments and maintains the $600-a-week unemployment supplement through January.

Cutting the $600 jobless benefit payments, or abolishing them entirely as some Republican senators favor, would pressure workers to return to jobs even if that increased their risk of contracting the coronavirus.

That in turn could lower the nation’s unemployment rate, which Trump would cite as evidence that the COVID-19 crisis was fading.

Similarly, if large numbers of schools reopen in traditional fashion instead of relying on distance learning and part-time classroom sessions, swing voters might be more open to campaign arguments that things were getting back to normal.

But even if the economic indicators show an uptick, it doesn't mean it will be perceived that way at street level, since it takes time to "trickle down."

He cautioned that this pandemic-driven economy may be an outlier given the sudden and extraordinary set of events. And Trump may be able to deliver strong GDP numbers in the third quarter, as the president has predicted.

Still, Hetherington said: “If those numbers don’t square with people’s perceptions and their experience with the economy, they’re not going to make a hill of beans’ worth of difference.”

 

[metis]

And it they don't get a new package with help for those unemployed, it's going to get far worse and soon, including even possibly more upticks with crime and maybe even more violent protests. Desperate people often resort to desperate measures.

 

[tytlyf]

Rush told me yesterday that this is a lie. Because it's based on "annual percentage." Which the "mainstream media" doesn't want people to know. So apparently, this isn't the worst recorded GDP in American history.

 

[sun rise]

GDP is reported in an annualized manner but so what.

Not annualized, GDP declined by 9.5% in between April and June, or by $1.8 trillion.

But by either measure, it was still the worst quarter on record.

The US only began keeping quarterly GDP records in 1947, so it's difficult to compare the current downturn to the Great Depression. That said, in 1932 the US economy contracted 12.9%.

America's economy just had its worst quarter on record - CNN

 

[tytlyf]

GDP is reported in an annualized manner but so what.

Not annualized, GDP declined by 9.5% in between April and June, or by $1.8 trillion.

But by either measure, it was still the worst quarter on record.

The US only began keeping quarterly GDP records in 1947, so it's difficult to compare the current downturn to the Great Depression. That said, in 1932 the US economy contracted 12.9%.

America's economy just had its worst quarter on record - CNN

But Rush told me yesterday on the radio it was an "annual percentage" and the quarter wasn't the worst on record. Something about how the "mainstream media" was hiding the "annual" part to make it seeeeeem like it was the worst quarter on history?

I don't know who to believe.

Drive-Bys Celebrate Distorted GDP Number

 

[sun rise]

But Rush told me yesterday on the radio it was an "annual percentage" and the quarter wasn't the worst on record. Something about how the "mainstream media" was hiding the "annual" part to make it seeeeeem like it was the worst quarter on history?

I don't know who to believe.

Drive-Bys Celebrate Distorted GDP Number

Rush told you something and you believe him? Sigh. Why not believe those who know what they're talking about and not just bloviating right-wing propaganda.

 

[Mitty]

Rush told me yesterday that this is a lie. Because it's based on "annual percentage." Which the "mainstream media" doesn't want people to know. So apparently, this isn't the worst recorded GDP in American history.

But will the world's greatest economist tell his voters that he has increased the DEBT to GDP ratio from ~106% to 136.51% by increasing each taxpayer's share of the National Debt from ~$165,000 to $213,900, and has increased the actual budget deficit from $0.6 trillion to $3.8 trillion?
U.S. National Debt Clock : Real Time
U.S. National Debt Clock 2016

 

[Tambourine]

At this rate, I almost expect an American Revolution to occur within my lifetime.

 

[Brickjectivity]

At this rate, I almost expect an American Revolution to occur within my lifetime.

A lot of people own small pieces of property and/or automobiles. I think revolutions against sitting governments tend to happen where people own little or nothing. They have nothing to lose. A revolution here would be tricky, and people might lose property. Also a lot of people have jobs, and they might lose their jobs. We also have a lot of retirees, and the retirees don't want a revolution, either.

 

[Shaul]

The German GDP fell even more in the same period.

 

[Yerda]

The German GDP fell even more in the same period.

Is that important?

 

[Shaul]

Is that important?

The thread topic is “Record collapse in GDP”.

 

[Revoltingest]

GDP fell?
How could it not, eh.

 

[Mitty]

At this rate, I almost expect an American Revolution to occur within my lifetime.

Or another civil war, and why a well regulated militia is necessary to the security of a free state.

 

[Yerda]

The thread topic is “Record collapse in GDP”.

Well, Ok.

I assumed that it wasn't a world record. Just an American one.

Germany went into a full national lockdown and has been easing restrictions slowly so I'm guessing they took the hit on GDP and won the don't-kill-your-own-citizens game.