US Economy Declines by a Record 32.9 Percent

Mish

The US economy put it its worst performance in history. Records date to 1947.

The BEA reports Real GDP fell at 32.9 percent annualized. The quarterly decline compared to a year ago is 9.5%. Both are records.

Consumer Metrics Comments

Rick Davis at Consumer Metrics has additional comments.

Although there are some legitimately startling numbers in the release, the size of the headline number is a consequence of "annualizing" a single quarter of dramatic economic displacement.

The quarter might better be measured in a year-over-year comparison against the 2nd Quarter of 2019. In inflation adjusted "real" dollars the overall economy shrank by -9.54%. 

Key Points 

  • Consumer personal expenditures declined only -1.79% in goods but -14.65% in services. The difference between those two categories makes sense -- roughly the same spending level on groceries but fewer haircuts and massages. 
  • Food and beverages purchased for off-premise consumption was up nearly +6% year-over-year, spending on food services and accommodations was down nearly -40% year-over-year
  • Spending on recreational goods soared (up +15.33% year-over-year), and spending on recreational services plummeted -54.13%. 
  • In the non-consumer sphere, spending by non-profits increased +51.53% year-over-year
  • Commercial spending on computer hardware (+9.73%) and software (+6.13%) also increased year-over-year.
  • Annualized household disposable income was reported to be $4382 higher than in the prior quarter, and the household savings rate was reported to be 25.7%, up 16.1pp from the prior quarter. These numbers comes from and annualization of the Federal relief payments from the CARES act, but the outrageous savings rate seems to indicate that households were reluctant (or unable) to spend those funds.

Mish

Comments (29)
No. 1-13
anoop
anoop

Look at the positive side--we set a new record, unlikely to beaten in our lifetime.

tokidoki
tokidoki

Annualized. That's the key. In actuality it's 10% down for the quarter. That's actually pretty good.

As I said, do you believe reports like this or do you believe blockbuster earnings reports coming out of TSMC, AMD, etc. Chip sales is a leading economic indicator. The fact they are going gangbuster means customers are flush with money. Their entertainment budget seems limitless.

#BestRecessionEva

Herkie
Herkie

And Trump also said today that mail in ballots will make a mess of our election - filled with fraud - make America a laughingstock, so we should "delay" the voting. Like till he can be sure of winning or dies of old age which ever comes first.

This has broken Twitter today. The Lincoln Project 4 word response had over 50,000 likes within about 22 minutes. My response to him at Twitter was "over my dead body you orange baboon." I got more than a few likes of my own.

Tony Bennett
Tony Bennett

tis but a flesh wound ...

Tony Bennett
Tony Bennett

US government ran a cool $2 trillion deficit for the quarter.

PecuniaNonOlet
PecuniaNonOlet

It has been almost four years, is this part of make america great again? When do all the manufacturing jobs get here? Wasnt the 2020 trump slogan “keep ameica great?” Is this what we want another four years? Are you better off than you were 4 years ago?

pvguy
pvguy

Yes, I am better off than I was four years ago.

A note on the recreational spending, you might want to google "RV sales Pandemic". That sector is booming, and most of those are built domestically.

RonJ
RonJ

"The US economy put it its worst performance in history."

It's what happens when state governments shut down their economies "non essential" businesses. California government is at least $54 billion in the hole and probably more with Newsom's latest dictates.

BLUEWIN
BLUEWIN

Somebody Please wake up and realize its a DEPRESSION not a RECESSION !!!

tokidoki
tokidoki

Did anyone see earnings from FAANG? They are doing extremely well during this "depression". There is NO DEPRESSION. iPhone sales are UP huge.

The coronavirus is not a hoax. The recession/depression is a hoax. People are more flush during this period than not.

nlightn
nlightn

So much for "the greatest economy any president has ever created.' NOT !!!!

Along with that ridiculous statement and attempting to postpone the election and attempting to curtail mail-in ballots,..Trumps new campaign slogan is,..

IITM = Insane In The Membrane

AshH
AshH

Well that seems like a dumb way to report GDP. By that metric, Kodac is up a billion percent over the past week, on an annualized basis, of course.

Realist
Realist

The US economy isn’t going anywhere until you crush the pandemic, like so many other countries have done. Trump should get on the phone and call Merkel, Trudeau, Abe, etc and ask them “How is it that you have managed to crush the pandemic in your country, because it is spreading out-of-control in the US?”


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