Its crazy to me that gdp only shrunk by 9 percent for the quarter. Thinking of the fuel that wasn't used, the entertainment services that weren't consumed, the non essential shopping that wasn't done and then all of the side effects like reduced financial transactions on the other things that didnt happen, it's crazy to me that that wasn't more than that.
Thinking through this does help me to see why you have to annualize if you aren't doing a quarter to quarter comparison.
"The economy" is doing fine, but that's not a very interesting bunch of numbers for most people. The private economy of the majority US households has been getting steadily worse for decades.
Shrinking GDP over a sustained period of time would be more accurate. GDP has decreased in past quarters even when there wasn't a recession, most recently in 2014.
None of those three look good, but, as far as I can tell, none indicate a contraction... at worst they indicate that things are remaining bad, but not getting worse. The first appears to be improving, slowly. The second appears to be hovering aroung the same level since 2010. The third link is broken for me, but when I find the data I think you're referencing on that site it appears that there is a dip in the latest quarter, but if you look at the history that data clearly does not track the overall performance of the economy very closely. I can't say I find your claim very credible so far, but if you have additional evidence I'd be very interested.
It would be amazing maintained over an extended period, but a brief 1-2 quarter peak at that level like in 2011 (1 @ 4.7%) or 2014 (2 @ 4.9%+) isn't that amazing, and some leading indicators (e.g., business spending) are already down.
And, since the end of the 2001 recession, even in good top-line growth periods, the distributional statistics have sucked compared to previous expansions.
A quarter is roughly 91 days. About 65 of which are week days, and that is where most economic activity happens.
Suppose that bad weather costs you 30% of economic activity in half the country for just one of those week days. That works out to losing 0.23% of the quarter's economic activity. But we are using a quarter to estimate annual growth, so that now looks like losing 0.92% annualized growth. From one day of disruption over part of the country.
As you see, blip from a bad winter storm on the East Coast really can cause the economy look like it is headed in a much worse direction than it is for a quarter.
The personal experience of the economy isn't quite as you make it. In polls, people do complain about the national economy being in terrible shape, but by a fairly good margin report that their own finances are in good shape. It's hard to weave a coherent narrative from those contradictory data.
He's citing year-over-year? Seems to me that for some reason the economy was in the toilet this time last year but it had reason to be an aberration. I don't know, it's a real mystery.
GDP is a flow statistic, though we often discuss it as a stock. (Cash in the bank is a stock statistic. Cash inflows is a flow. Amount of stuff versus delta.)
It's difficult to compare this quarter to those in 1918, given the dramatic differences in the composition of the economies and statistical methods. But a ~10% reduction in flows doesn't strike me as that bad to the country's long-term potential.
The assets are mostly still there. And nobody is forgetting how to do their job in 3 to 6 months, though productivity in some sectors will take a hit from the changes.
reply