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Wednesday, September 23, 2020

32% growth in the GDP this quarter



The media wrote us off this summer. Josh Barro of New York magazine wrote on July 20, "The Economy Won’t Be Recovering Anytime Soon." 

Barro wrote, "The V-shaped recovery that Trump economic adviser Larry Kudlow forecast as recently as July 8 is not in the cards. A double-dip recession is possible, but the most probable outcome right now looks like treading water, with the fast recovery of the late spring turning into a long, slow slog. Fewer jobs will be created, and many businesses will find themselves unable to stay afloat until conditions improve.

"Exactly how rough the economic recovery will be depends on many variables, but three will be key: the extent and persistence of covid outbreaks, whether and how robustly Congress extends additional economic aid to workers and businesses, and whether and when an effective vaccine is widely distributed."

We are doomed, doomed, as Dr. Zachary Smith always said. He was a character in the TV series Lost In Space. Barro and the rest of the media doomsayers are just lost in space.

Sergei Klebnikov of Forbes wrote on August 24, "Economists Warn U.S. GDP Won’t Recover To Pre-Pandemic Levels Until 2022."

His story said, "The United States remains stuck in a recession and it will likely take years for economic growth to return to pre-coronavirus pandemic levels, economists surveyed by the National Association for Business Economics warned on Monday.

"About half of the respondents in the NABE’s August 2020 Economic Policy Survey said that U.S. GDP — the broadest measure of the economy — won’t return to its pre-pandemic level until 2022 or later."

However, even as the economists filled out their survey forms, the American economy was shaking off a body blow that saw the GDP shrink at an annualized rate of 32%. We never suffered as deep a blow as quick, but we bounced back. Hard. And fast.

The stock market shed its bear market in just 5 months and 6 days -- a new record for quick recovery. This was not your Bush-Obama recession. It was deeper, but an actual capitalist was at the helm. He wrote the book on The Art of the Comeback.

Rolling back regulations, dropping corporate taxes, prodding businesses to wean themselves from Red China, and building a wall to keep illegal immigrants out helped Make America Great Again. Having done that, President Donald John Trump now had street cred, as they say, when it comes to economics.

Plus businesses were prepared. Retailers were already going online. This accelerated that. Work from home also was easy to implement thanks to the Internet.

The nation saw its deepest recession ever when politicians deliberately shut the economy down to flatten the curve or some other nonsense.

But Americans are a resilient people. That 32% collapse in the second quarter may matched in the third quarter with a 32% expansion.

The Federal Reserve Bank of Atlanta reported, "The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2020 is 32.0% on September 17, up from 31.7 percent on September 16. After this morning's housing starts report from the U.S. Census Bureau, the nowcast of third-quarter real residential investment growth increased from 39.3% to 46.1%."

This is an early report on the economy in July, August, and September. Heck, the third quarter is not over for another week.

And even if the growth in the third quarter matches as a percentage the shrinkage in the second quarter, we will be down slightly in those 2 quarters because of math. Also these are annualized rates, meaning the actual swing is 16 points, not 64.

But make no mistake, this is a very rapid recovery.

Americans are a remarkable people. Never count us out. Hitler did. The Soviets did. Even King George did. We bow to none but God.

19 comments:

  1. I believe about half the economists are democrats!

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    Replies
    1. Off by half. I tend to think they all are

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    2. An economist is like an accountant without the personality.

      My MBA was hevilly weighted towards economics and quantitative analysis. Economics is an inexact art. The Keynesian economists are biased and are never right no matter who is president.

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  2. I believe about half the economists are democrats!

    Your belief is very likely true. And remember: Democrats, and the Democrat Party, want the United States to fail!

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  3. 32 is a great number, It was worn by Jim Brown and Sandy Koufax. No more need be said.

    ReplyDelete
  4. "We bow to none but God." That 'We' is the Sovereign Citizens that the People in the United States of America are... Not the Dictionary Definition but the 'endowed by their creator with..' definition.

    ReplyDelete
  5. “We bow to none but God.”

    A motto to live by.

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  6. If the economy grows and only the rich get richer and the left keeps locking everyone down destroying small business for Covid panics, then what?

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    Replies
    1. We do some old-fashioned assembly work: tree, rope, Leftist.

      It's so simple anyone can do it, and it's been needed for quite some time!

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    2. Lamppost if tree not available.

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  7. Remember “God Invented Economists To Make Astrologers look good”. There’s maybe 3 good economist and their forecasts are vague because there are too variables to be precise.

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    Replies
    1. What the hell does that say about Meteorologist? Boy they are really down the pecking order!

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    2. Regarding meteorologists - In 1968, the weather could be predicted 3 days in advance with 80% accuracy. Now 50 years later with weather satellites, bigger/faster computers and better modeling, the weather can be predicted 3 days in advance with an accuracy of 80%.

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  8. Wall St. is doing fine; Main St. is lagging significantly. Some sectors, notably hospitality, may never recover

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  9. Long term recovery depends on two things.
    *Trump winning this election.
    *The Republicans coming up with a like
    minded, winning candidate for 2024!

    Republicans can't drop the ball and go into hiding for four years after this election.

    ReplyDelete
  10. Know why the Robinson lad in “Lost in Space” was always in “Danger! Danger!” ...?

    Because Dad Robinson’s favorite expression was “OK everyone, fire at Will !”

    ReplyDelete