I said last June: The 3d quarter GDP numbers would explode and lots of non-economists would misunderstand what it means. Right on time, my prediction comes true.
Let me explain why today's numbers were not only predictable, but (almost) inevitable. Start with basic math.../1
Let me explain why today's numbers were not only predictable, but (almost) inevitable. Start with basic math.../1
...if you start with 100 & lose 50%, you have 50. Then, if you gain 50% off that number, you have 75. This is basic: When you fall, you begin at a higher number than when you start bouncing back. Rounding, we dropped 30% (annualized) and went up 30%. That doesnt bring you back..2
...to where you started. The fall was, in part, a function of policy failures. The recovery that wasnt full also, in part, was a function of policy failures. And it is for this exact reason that, with no change in policy, next quarter growth will be far, far less. To explain...4
...the key to avoiding a massive collapse in the spring - which otherwise was inevitable because of COVID shutdown - was a massive, targeted stimulus. Under that, small businesses wouldve been paid full amounts for rents, salaries etc SO LONG as they closed. Big corporations...5
...with huge cash supplies (which is most of them) would have received large tax breaks for shutting down and continuing to pay employees, vendors etc. Those unemployed would get a living wage. Massively expensive? Yup. (This is why the huge 2017 tax cuts in a booming economy...6
...was insane. We tossed out tons of money when the economy didn't need it - we were just goosing it higher in a reckless policy I truly never believed the GOP would do, solely to falsely increase corporate profits and the stock market, yet taking on inevitable chaos when...7
...the economy, as it must, turned. But insane tax cut policy or not, once we hit crisis, we needed massive stimulus to avoid long term damage to the economy. Because we didn't do that, the record setting economic collapse of the spring was inevitable. That created long-term...8
...economic damage that we wont escape for a long time (massive unemployment, small businesses shutting down.) That reality is still with us and will not be gone anytime soon because the economy was mismanaged to, once again, prop up the stock market and corporate earnings...9
...that is why you have the seemingly odd combination of record setting GDP growth and massive unemployment, small businesses remaining shut, etc.
So, I have always said that the GDP collapse of the spring was inevitable but it was far worse than it needed to be because...10
So, I have always said that the GDP collapse of the spring was inevitable but it was far worse than it needed to be because...10
...of policy failures. Then, the 2nd policy failure that has given us a false goosing of GDP: The push to reopen without ever having allowed a full shutdown through a massive stimulus. COVID could have been - at least for awhile - largely defeated by June if our leaders had...11
...acted responsibly: Total, temporary shutdown, invocation of the Defense Production Act so we didnt reopen without massive numbers of testing kits and PPE available. And, in the event of a return and a total collapse, a strategy for military logistics delivery of supplies...12
...like food and medicine if we had to shut down again. Then, reopen slowly. What we did was say "let's push up GDP, reopen massively without supplies, and trade off a massive explosion in COVID for that." GDP going up a lot is happening for the same reason COVID cases are...13
...going up a lot: Reckless economic and public health management. Reopening everything without a public health plan other than "It will magically go away" meant 2 very very obvious things: COVID would explode, as would 3d quarter GDP (particularly since the growth would be...14
...a percentage growth off of a much smaller number than when it fell - see what I explained at the beginning of this thread.) But that balance cannot hold - eventually, COVID spread would/is starting to shut down the economy again. Growth in 4th quarter will be dramatically..15
...slowed because of that and the refusal to use a stimulus to help small businesses stay open and keep people who have lost their jobs able to pay rent, buy food, etc.
We traded death for single quarter massive GDP growth. And ultimately, we will have traded closures of...16
We traded death for single quarter massive GDP growth. And ultimately, we will have traded closures of...16
...hospitals, rapidly increased death, & another economic shutdown all so we could have a single quarter goosed up GDP - required because of the policy failures in the spring. If economic activity stops, then starts again at a significantly lower level, you will have massive...17
...collapse in one quarter and massive growth for another. Just like if you are driving along at 100 miles an hour, hit the brakes so your speed drops 50%, then hit the gas until you are up to 75 mph (gaining 50%).
So no, our GDP growth is not a great thing. It is a one...18
So no, our GDP growth is not a great thing. It is a one...18
...time thing, artificially created because of policy incompetence and a willingness to kill and sicken people in order to get it. In our history books, it will be evidence of our failure to properly manage our public health and our economy, not a sign of success.
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