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U. S. Set to Report Ugliest GDP on Record - Printable Version

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U. S. Set to Report Ugliest GDP on Record - Mick - 07-29-2020

The pandemic-induced economic decline in April meant a 34.8% annualized drop in GDP for Q2, 2020.  By way of comparison, the worst drop on record was 10% in 1958 -- during a global flu pandemic.  Consumer spending collapsed as Americans sheltered in place. And here's an oddity: net government spending will actually decline. Federal outlays jumped like crazy, but state and local government spending shrank due to collapsing tax bases.

Q3 is expected to increase by 16.7%, according to a Wells Fargo survey of economists, so not quite a "V" shaped recovery. Our management doesn't expect the economy to fully recover until 2022, assuming all goes reasonably well. The new stimulus will help. More spending, less unemployment help:
https://reason.com/2020/07/28/the-next-coronavirus-stimulus-plan-more-spending-smaller-unemployment-benefits-and-tax-breaks-for-going-out-to-eat/

https://www.bloombergquint.com/global-economics/u-s-is-about-to-unveil-the-ugliest-gdp-report-ever-recorded

[Image: 1200x-1.png]

[Image: 1200x-1.png]

BTW, the Q3 results will come out right before the presidential election. And there are indications that Biden is expected to win:
https://fivethirtyeight.com/features/voters-are-starting-to-doubt-trumps-reelection-chances/

77-year old Biden will make his VP selection next week.
https://news.yahoo.com/biden-vice-presidential-pick-next-week-224613551.html

Biden's VP choice will be critical. Most people understand that the VP has an increased likelihood of being elected president. How does President Kamala Harris sound?
https://apnews.com/d3fc8b88cde56bac9f1e7b5e494fb019

RE: U. S. Set to Report Ugliest GDP on Record - rudruff - 07-29-2020

I just don't see Harris getting it. A Democrat from California doesn't change who carries the state and she hurts in a bunch of other states regardless of gender or ethnicity. 

The middle of the country gets inundated with "San Francisco values" ads. 

I think the choice comes from a purple state.

RE: U. S. Set to Report Ugliest GDP on Record - BostonCard - 07-29-2020

BEA will release the "advance estimate" of the second quarter GDP tomorrow at 5:30 am PDT.  The Atlanta Fed has a realtime GDP estimator (and of course there are estimates from a bunch of other sources):

https://www.frbatlanta.org/cqer/research/gdpnow

Its latest estimate is -32.1% (this is an annualized rate that implies a quarter on quarter decline of 7.2%).  The root mean squared error compared to the advance estimate on the day before the release is 1.15%, though it is worth noting that the estimate was off by about 3.8% (absolute difference) for the first quarter GDP, as COVID-19 throws everything into disarray.  I would imagine a greater discrepancy between the advance estimate and the final number as well, though first quarter GDP was only revised by 0.2% between the advanced estimate and the second estimate (-4.8% to 5%).


BC

RE: U. S. Set to Report Ugliest GDP on Record - 82lsju - 07-29-2020

EU Q2 2020 GDP preliminary flash estimate comes out Friday

lex24 - lex24 - 07-29-2020

(07-29-2020, 05:29 AM)Mick Wrote:  The pandemic-induced economic decline in April meant a 34.8% annualized drop in GDP for Q2, 2020.  By way of comparison, the worst drop on record was 10% in 1958 -- during a global flu pandemic.  Consumer spending collapsed as Americans sheltered in place.  And here's an oddity: net government spending will actually decline.  Federal outlays jumped like crazy, but state and local government spending shrank due to collapsing tax bases.

Q3 is expected to increase by 16.7%, according to a Wells Fargo survey of economists, so not quite a "V" shaped recovery. Our management doesn't expect the economy to fully recover until 2022, assuming all goes reasonably well.  The new stimulus will help.  More spending, less unemployment help:
https://reason.com/2020/07/28/the-next-coronavirus-stimulus-plan-more-spending-smaller-unemployment-benefits-and-tax-breaks-for-going-out-to-eat/

https://www.bloombergquint.com/global-economics/u-s-is-about-to-unveil-the-ugliest-gdp-report-ever-recorded

[Image: 1200x-1.png]

[Image: 1200x-1.png]

BTW, the Q3 results will come out right before the presidential election.  And there are indications that Biden is expected to win:
https://fivethirtyeight.com/features/voters-are-starting-to-doubt-trumps-reelection-chances/

77-year old Biden will make his VP selection next week.
https://news.yahoo.com/biden-vice-presidential-pick-next-week-224613551.html

Biden's VP choice will be critical.  Most people understand that the VP has an increased likelihood of being elected president.  How does President Kamala Harris sound?
https://apnews.com/d3fc8b88cde56bac9f1e7b5e494fb019

Better than Pres Stacey Abrams.....

RE: U. S. Set to Report Ugliest GDP on Record - OutsiderFan - 07-29-2020

Very few kids will be getting the GI Joe with Kung Fu grip this year for Christmas, or maybe even the one after that.

RE: U. S. Set to Report Ugliest GDP on Record - Mick - 07-29-2020

(07-29-2020, 08:35 AM)OutsiderFan Wrote:  Very few kids will be getting the GI Joe with Kung Fu grip this year for Christmas, or maybe even the one after that.

Along those lines, it looks like half of the jobs lost will be permanent losses.  I don't know if that's half of the 51 million first time unemployment claims or half the 32 million currently getting some kind of unemployment-related check or the 10 million cited in this article.  My guess is in the 16 million to 18 million range.  Devastating.

https://www.usatoday.com/story/money/2020/07/29/almost-half-of-all-jobs-lost-during-coronavirus-may-be-gone-permanently/112446072/

RE: U. S. Set to Report Ugliest GDP on Record - OutsiderFan - 07-29-2020

It's not about new skills. It's about the need to activate anti-trust laws to break up companies so that more jobs can be created. Automation is a scythe, or maybe I should call it an industrial combine whacking through so many livelihoods. There is software that uses AI to design logos, FFS. I now have a subscription to a web app that allows me to make high res files without the Adobe suite. Driverless freight trucks. Delivery drones. Even legal work is being automated.  So too is video production. 

https://www.vox.com/recode/2020/7/1/21308539/self-driving-autonomous-trucks-ups-freight-network

The Congress needs to understand that giving people more money than they can make working is a better alternative than tens of millions of people unable to afford shelter and food because they can't afford it. Maybe building economies on the quicksand of debt, that forces thousands of bankruptcies and million of jobs down the toilet when the music stops, isn't such a great idea after all.

RE: U. S. Set to Report Ugliest GDP on Record - Goose - 07-29-2020

(07-29-2020, 09:12 AM)OutsiderFan Wrote:  It's not about new skills. It's about the need to activate anti-trust laws to break up companies so that more jobs can be created. Automation is a scythe, or maybe I should call it an industrial combine whacking through so many livelihoods. There is software that uses AI to design logos, FFS. I now have a subscription to a web app that allows me to make high res files without the Adobe suite. Driverless freight trucks. Delivery drones. Even legal work is being automated.  So too is video production. 

https://www.vox.com/recode/2020/7/1/21308539/self-driving-autonomous-trucks-ups-freight-network

The Congress needs to understand that giving people more money than they can make working is a better alternative than tens of millions of people unable to afford shelter and food because they can't afford it. Maybe building economies on the quicksand of debt, that forces thousands of bankruptcies and million of jobs down the toilet when the music stops, isn't such a great idea after all.
OF, FWIW I think this problem is much more complex than that. COVID-19 has hurried along a process in the US that has been going on in the EU in an accelerated form for at least a decade in terms of labor issues. We are now catching up (and maybe passing) them. These problems are exacerbated by COVID-19, but would have needed solving anyway. Talking about it here would certainly be beyond the Terry rule, so I won't attempt it.

RE: U. S. Set to Report Ugliest GDP on Record - BostonCard - 07-30-2020

(07-29-2020, 07:36 AM)BostonCard Wrote:  BEA will release the "advance estimate" of the second quarter GDP tomorrow at 5:30 am PDT.  The Atlanta Fed has a realtime GDP estimator (and of course there are estimates from a bunch of other sources):

https://www.frbatlanta.org/cqer/research/gdpnow

Its latest estimate is -32.1% (this is an annualized rate that implies a quarter on quarter decline of 7.2%).  The root mean squared error compared to the advance estimate on the day before the release is 1.15%, though it is worth noting that the estimate was off by about 3.8% (absolute difference) for the first quarter GDP, as COVID-19 throws everything into disarray.  I would imagine a greater discrepancy between the advance estimate and the final number as well, though first quarter GDP was only revised by 0.2% between the advanced estimate and the second estimate (-4.8% to 5%).


BC

First quarter GDP cane in at -32.9%

BC

RE: U. S. Set to Report Ugliest GDP on Record - 82lsju - 07-30-2020

 
https://www.cnbc.com/2020/07/30/us-gdp-q2-2020-first-reading.html
   
The release from the Bureau of Economic analysis is here  
the market seems to not be bothered as it is currently (9:40am PT) down ~1%

RE: U. S. Set to Report Ugliest GDP on Record - BostonCard - 07-30-2020

I think a drop of that magnitude was "priced in" as they say.

BC

RE: U. S. Set to Report Ugliest GDP on Record - Farm93 - 07-30-2020

(07-30-2020, 09:54 AM)BostonCard Wrote:  I think a drop of that magnitude was "priced in" as they say.

BC
The markets are already pricing in a lot of deaths, a lot of economic hardship and a lot of government stimulus.  

As long as large companies can get access to easy money and/or small competitors continue to fail and/or international markets are able to maintain their new normal then stock markets can be OK for the large publicly traded companies with global reach.

In my world, I have never purchased so much from Amazon (delivery) and Walmart (curbside pick-up), and so little from local and regional businesses.   So my purchase behavior in the COVID era has been great for AMZN and WMT and awful for everyone else. 

In time even the bigger USA companies will feel the pain as the easy money will have to slow eventually and the former employees of those defunct smaller companies will not have money to spend.  

The political situation over the next ~100 days is also already priced in I suspect.   I would expect in October statements from Biden will begin to move financial markets more than statements from Trump given that the markets will become more confident in their expectations of a different type of COVID19 management in 2021.

RE: U. S. Set to Report Ugliest GDP on Record - 82lsju - 07-30-2020

(07-30-2020, 09:54 AM)BostonCard Wrote:  I think a drop of that magnitude was "priced in" as they say.

BC

yep, in line with expectations, we'll see what the EU says tomorrow

RE: U. S. Set to Report Ugliest GDP on Record - 82lsju - 07-31-2020

Quote:The euro zone economy contracted by 12.1% in the second quarter of 2020, compared to the first three months of the year, according to preliminary data from the region’s statistics office.
...
German GDP contracted by 10.1%; Italy’s sank by 12.4%; France’s fell by 13.8%; and Spain’s shrank by 18.5%.


https://www.cnbc.com/2020/07/31/euro-zone-gdp-q2-2020-as-coronavirus-crisis-hits.html

RE: U. S. Set to Report Ugliest GDP on Record - BostonCard - 07-31-2020

Note these are quarter on quarter declines, not annualized.  The decline would have been -40.3% if reported similarly to the US (quarterly decline, annualized).  Spain's would be a 55.9% decline on an annualized basis.

BC