Record-breaking GDP growth leaves U.S. economy in the same place as the height of the Great Recessio

[shotten99]

This discussion thread was locked as off-topic by JudyM (a host of the Latest Breaking News forum).

Source: The Week

The U.S. GDP jumped at a 33.1 percent annualized rate in the third quarter, a growth of 7.4 percent from Q2, Commerce Department records released Thursday reveal. But as Gregory Daco, the chief U.S. economist at Oxford Economics, put it in a tweet, that growth is both "record-breaking and meaningless at the same time."

It's true that the 7.4 percent GDP rise from Q2 to Q3 is a record. But it also comes after a record contraction from Q1 to Q2, and a total loss of 10.3 percent throughout 2020, so it doesn't even come close to making up what was lost amid the pandemic. In fact, the 3.5 percent total GDP shrinkage during 2020 "means we are still down almost as much as we were during the height of the Great Recession," tweets Diane Swonk, chief economist at Grant Thornton.

Read more: https://us.yahoo.com/news/record-breaking-gdp-growth-leaves-152735900.html

[paleotn]

1. It's like....

being happy you've suddenly rising 25K feet out of the Mariana trench! All well and good, but you're still about 2 miles under water. Perspective, perspective.

[progree]

2. Clarification. The economy is below where it was in Q2 2018, but above where it was in Q1 2018

Here is Diane Swonk's tweet:

Link to tweet

Real GDP jumped at a 33.1% rate in the third quarter, but remained 3.5% below the the peak hit prior to the crisis in the fourth quarter of 2019. That means we are still down almost as much as we were during the height of the Great Recession in 2008-09.

Underline added. True. The 3.5% drop that occurred between Q4 2019 and Q3 2020 is close to the maximum peak-to-trough 4.0% drop that occurred during the Great Recession (Q4 2007 to Q2 2009).

But that's different from being "in the same place", which some would interpret (including me) as being at the same level. I realize it can be interpreted just about any way one wants to interpret it, which is why the headline should be reworded.

Whatevs. The GDP in the Great Recession was $15-something Trillion. It's now (Q3 2020) at $18.583 in chained 2012 dollars, which is how the BEA reports the inflation-adjusted GDP.

Using plain old unadjusted ordinary greenbacks, Q3 2020 is even higher compared to the Great Recession levels, by the amount of inflation added to the difference shown above.

The headline:

Record-breaking GDP growth leaves U.S. economy in the same place as the height of the Great Recession

https://fred.stlouisfed.org/series/GDPC1

Billions of Chained 2012 Dollars, Seasonally Adjusted Annual Rate

Real gross domestic product is the inflation adjusted value of the goods and services produced by labor and property located in the United States.For more information see the Guide to the National Income and Product Accounts of the United States (NIPA). For more information, please visit the Bureau of Economic Analysis ( http://www.bea.gov/national/pdf/nipaguid.pdf ).

"Real" means inflation adjusted.

Q3 2020: 18,583.984 Billion $

https://fred.stlouisfed.org/series/GDPC1
For some reason, FRED uses dates that are the beginning of the quarter.
Billions of Chained 2012 Dollars, Seasonally Adjusted Annual Rate
2007-04-01 15582.085
2007-07-01 15666.738
2007-10-01 15761.967 -- Q4. The height of the pre Great Rec. economy
2008-01-01 15671.383
2008-04-01 15752.308
2008-07-01 15667.032
2008-10-01 15328.027
2009-01-01 15155.940
2009-04-01 15134.117 -- Q2. The bottom of Great Rec., down 3.98%
2009-07-01 15189.222
2009-10-01 15356.058
2010-01-01 15415.145
2010-04-01 15557.277
2010-07-01 15671.967
2010-10-01 15750.625
2011-01-01 15712.754
2011-04-01 15825.096
2011-07-01 15820.700
2011-10-01 16004.107
2012-01-01 16129.418
2012-04-01 16198.807
2012-07-01 16220.667
2012-10-01 16239.138
2013-01-01 16382.964
2013-04-01 16403.180
2013-07-01 16531.685
2013-10-01 16663.649
2014-01-01 16616.540
2014-04-01 16841.475
2014-07-01 17047.098
2014-10-01 17143.038
2015-01-01 17305.752
2015-04-01 17422.845
2015-07-01 17486.021
2015-10-01 17514.062
2016-01-01 17613.264
2016-04-01 17668.203
2016-07-01 17764.388
2016-10-01 17876.179
2017-01-01 17977.299
2017-04-01 18054.052
2017-07-01 18185.636
2017-10-01 18359.432
2018-01-01 18530.483 (Q1 2018)
2018-04-01 18654.383 (Q2 2018)
2018-07-01 18752.355
2018-10-01 18813.923
2019-01-01 18950.347
2019-04-01 19020.599
2019-07-01 19141.744
2019-10-01 19253.959 (Q4 2019)
2020-01-01 19010.848
2020-04-01 17302.511
2020-07-01 18583.984 (Q3 2020)

So we're back to between Q1 2018 and Q2 2018 levels

(note to myself, nor..x sheet 3 K7)

[central scrutinizer]

3. Finally, some math

We’re down 11% from the end of the first quarter. And with the recent surges, it’s unlikely the 4th quarter will help, even with Black Friday coming up.

[progree]

5. No we're not down 11% from the first quarter. We're down 2.2% from Q1. And down 3.5% from Q4 2019

https://fred.stlouisfed.org/series/GDPC1
Billions of Chained 2012 Dollars, Seasonally Adjusted Annual Rate
For some reason, FRED uses dates that are the beginning of the quarter.
2019-10-01 19253.959 (Q4 2019)
2020-01-01 19010.848 (Q1 2020)
2020-04-01 17302.511
2020-07-01 18583.984 (Q3 2020)

[central scrutinizer]

7. 2nd quarter was -32.9 (annualized)

3rd quarter was +33.1 (annualized). So my -11 number is based on that. You’re right-I should have de-annualized (is that a word?) both. Then I get -2.8% from end of Q1 to end of Q3. -9.5 followed by +7.4

[progree]

8. OK, thanks. Though a little quibble on my part: I get a 9.0% drop from Q1 to Q2

and like you, I get a 7.4% increase from Q2 to Q3.

[central scrutinizer]

10. You're right

I did it at the brew pub on my phone and read .905 as .950. Shouldn’t have gotten the double IPA.

[progree]

11. LOL. Pls stay safe at the brew pub. Infection rate is getting crazy where i live /nt

[kb3ojg]

4. True sory:

One of my wife's relatives is a woman with a severe gambling problem.

She told us about the time she went on a weekend gambling cruise and ended up "winning" 65,000 dollars.

Only problem was....she had gambled something like 85,000 dollars over the course of tat cruise.

(She had it set up so she could borrow against the value of her house.....)

So, even after that "win", he was actually something like 20 grand down, by the end of the weekend.

Sad part was she deluded herself into only thinking about her "winnings"...and not about how much she had *blown* overthe course of that weekend.

Just an observation....dunno how relevant.

[ProfessorGAC]

6. I've Heard Similar Stories

First, welcome to DU.
Second, we know someone at a smaller scale that had a box where they kept casino winnings.
But, when they went, they would pull $ out of the savings account.
Every time they won, in the box.
At the end of the year, he'd count the money in the box. He'd say we won $600 this year, $700 last year, $400 the year before.
Thing is, we also knew he was pulling $100 out when he went there, and went 15-20 a year.
We could not convince him he was actually in the red, because all he counted was what was in the box!

[Steelrolled]

9. Meaningless numbers but still, positive is better than negative

[JudyM]

12. Locking

Alerted on for duplicate content. Please continue discussion in this earlier post: https://www.democraticunderground.com/10142615603