28 votes

Second-quarter GDP plunged by worst-ever 32.9% amid virus-induced shutdown

22 comments

  1. [19]
    dubteedub
    Link
    Jesus. The nearest closest drop in GDP was Q2 1921 during the Great Depression when the economy shrank 28%. With the absolutely abysmal response to the pandemic ongoing in the U.S., I just don't...

    Neither the Great Depression nor the Great Recession nor any other slump over the past two centuries have ever caused such a sharp drain on the economy.

    Jesus. The nearest closest drop in GDP was Q2 1921 during the Great Depression when the economy shrank 28%.

    With the absolutely abysmal response to the pandemic ongoing in the U.S., I just don't see anyway that this improves. We are barely re-opening the economy and have already had several states re-close after opening too soon. Too many morons and Trumpists refuse to even wear masks when going outside.

    This feels like another repeat of the 2008 election where a Democrat took control of an economy circling the drain and managed to turn things around. I just hope that Joe Biden wins this election and we can pull this off two times in a row.

    8 votes
    1. [14]
      Omnicrola
      Link Parent
      I honestly can't even begin to imagine what that looks like. Even if we assume that we elect Biden, and somehow the entire Congress becomes majority Democrat, what does an economic recover plan...

      I just hope that Joe Biden wins this election and we can pull this off two times in a row.

      I honestly can't even begin to imagine what that looks like. Even if we assume that we elect Biden, and somehow the entire Congress becomes majority Democrat, what does an economic recover plan look like? Even if we hand-wave away the virus for a moment, the amount of economic disruption that has already happened is staggering. So many jobs and businesses lost. We can't just say "ok, time-out over, get back to it" and watch everyone get back to work.

      8 votes
      1. [12]
        MimicSquid
        Link Parent
        Universal basic income, universal health care, strong subsidies for necessary industries, legal requirement for mask wearing combined with strong enforcement, appropriate funding for hospitals and...

        Universal basic income, universal health care, strong subsidies for necessary industries, legal requirement for mask wearing combined with strong enforcement, appropriate funding for hospitals and primary care physicians... there's stuff that could be done.

        6 votes
        1. Omnicrola
          Link Parent
          UBI+UBC enacted during the same presidential term would almost make this president's term worth it. I take it back. It would be 100% worth it.

          UBI+UBC enacted during the same presidential term would almost make this president's term worth it. I take it back. It would be 100% worth it.

          1 vote
        2. [10]
          Contentus
          Link Parent
          I would like to see your plan on what expenses to cut or what taxes to raise in order to pay for all that.

          I would like to see your plan on what expenses to cut or what taxes to raise in order to pay for all that.

          1. [9]
            MimicSquid
            Link Parent
            The US government has created trillions of dollars to address the coronavirus already, and is about to create a trillion more in the latest bill. No cuts or taxes needed.

            The US government has created trillions of dollars to address the coronavirus already, and is about to create a trillion more in the latest bill. No cuts or taxes needed.

            2 votes
            1. [8]
              Contentus
              Link Parent
              Hum... So maybe we should print a few more trillion and solve all the problems in the world.

              Hum... So maybe we should print a few more trillion and solve all the problems in the world.

              1. [7]
                MimicSquid
                Link Parent
                Do you think that printing more money will solve all the problems in the world?

                Do you think that printing more money will solve all the problems in the world?

                1 vote
                1. [6]
                  Contentus
                  Link Parent
                  I don't like using /s in my writing but I admit it probably causes confusion. My point is that if printing money has no downside, why not do it even more and pay for everything we can think of?...

                  I don't like using /s in my writing but I admit it probably causes confusion. My point is that if printing money has no downside, why not do it even more and pay for everything we can think of? Why stop at a 1000$ dollar UBI? Why not shoot for 100k per month per person?

                  It MUST have downsides. Money is time and effort. It doesn't (or shouldn't) come into existence out of thin air.

                  People throw out these "UBI ideas" as if they wouldn't be a complete revolution. Revolutions are risky and in my view we should make more small and cheap experiments about everything, including UBI.

                  1. [5]
                    MimicSquid
                    Link Parent
                    I ask because I was hoping for a response more like this one, where we could actually discuss ideas as opposed to having a duel of snarky one-liners. Regarding your comment: I absolutely agree...

                    I ask because I was hoping for a response more like this one, where we could actually discuss ideas as opposed to having a duel of snarky one-liners.

                    Regarding your comment: I absolutely agree that under most circumstances just printing off a trillion more dollars and handing it out would have large impacts, including a significant spike in inflation, as more dollars pursue the same goods and services. Under the current situation things are a little different. Demand has cratered, and in many cases no amount of money will make that demand bounce back. This is a problem, as the people in those industries still have needs even as no one is buying what they're selling. Restaurants are a great example of this. The staff still need to pay rent, even if no one in their city can legally go out to eat. Money that used to move through the economy is instead piling up in the few places where supply and demand can still line up, and a lot of people are running out of cash.

                    How do you make sure that people can still pay for necessities when it's important that they don't go back to work? How do you make sure that they get the medical care they need in order to not spread the coronavirus further? How do you make sure that the industry they worked in before is still there when it's safe to go back to work? How do you make sure the hospitals stay open when all of the elective care that used to fund them is impossible?

                    You know my answer: what's yours?

                    1 vote
                    1. [4]
                      Contentus
                      Link Parent
                      So I guess you concede that your solution is in fact a poisoned band aid? My "solution" is simple but difficult: during good times you save the resources you will use during the bad times. Money...

                      So I guess you concede that your solution is in fact a poisoned band aid?

                      My "solution" is simple but difficult: during good times you save the resources you will use during the bad times. Money printing is a desperate action of a system on its knees. It's essentially a complex and opaque form of taxation. It might not cause inflation now but it will eventually. If not in consumer goods, in real estate, financial or other kind of assets.

                      My answer can be applied at all levels: from the individual to the government. It starts with changing mentalities and ends with creating institutions operating under sound principles. It's simple, but not sure if realistically feasible. But I won't propose solutions promoting creating money out of thin air. Or in other words: trying to create wealth without the time and effort as inputs.

                      1. [3]
                        MimicSquid
                        Link Parent
                        I don't concede any such thing, and you didn't answer my question. Let me narrow it down for you. Right now, within the next three months there are expected to be 20 Million evictions in the...

                        I don't concede any such thing, and you didn't answer my question. Let me narrow it down for you. Right now, within the next three months there are expected to be 20 Million evictions in the United States. High moral ground about "saving for the future" aside, what are you proposing to do about all those people?

                        1 vote
                        1. [2]
                          Contentus
                          Link Parent
                          Maybe I wouldn't take money printing out of the picture in the short term. But long-term I gave you my answer. It's not a moral position, its an idea based on rationality. So no monetary policy to...

                          Maybe I wouldn't take money printing out of the picture in the short term. But long-term I gave you my answer. It's not a moral position, its an idea based on rationality.

                          So no monetary policy to pay for UBI and other dreams (in the bad sense of the word) like that. If we want new expenses, let's fund them properly.

                          1. MimicSquid
                            Link Parent
                            Ok. Thanks for the conversation.

                            Ok. Thanks for the conversation.

      2. skybrian
        Link Parent
        Maybe not everyone, but to some extent that is what's expected. We can expect something of a bounce from people going back to doing what they were doing, travelling, shopping, and so on. People...

        Maybe not everyone, but to some extent that is what's expected. We can expect something of a bounce from people going back to doing what they were doing, travelling, shopping, and so on. People who can afford it are going to want to eat out and whatever restaurants survive will do good business. Eventually more restaurants open. Similarly for other industries. This necessarily means some jobs come back, though maybe it's a different business doing the hiring.

        Probably not as many as before, though, or at least not for a while.

        2 votes
    2. [3]
      joplin
      Link Parent
      Do you mean 1931? I can't even find a site that has numbers before 1929, but the Great Depression started in 1929.

      The nearest closest drop in GDP was Q2 1921 during the Great Depression when the economy shrank 28%.

      Do you mean 1931? I can't even find a site that has numbers before 1929, but the Great Depression started in 1929.

      3 votes
      1. [2]
        dubteedub
        Link Parent
        https://image.cnbcfm.com/api/v1/image/106640317-1596116905613-20200728_Cox_GDP_Long_Run.png?v=1596116910&w=1910 The chart here that is featured four paragraphs into the article.
        4 votes
        1. joplin
          Link Parent
          Ah, fair point! I read in "Reader Mode" and it didn't display the chart. 1921 definitely is the (previous) low point. But I think the yellow area under the words "Great Depression" are what is...

          Ah, fair point! I read in "Reader Mode" and it didn't display the chart. 1921 definitely is the (previous) low point. But I think the yellow area under the words "Great Depression" are what is typically considered the Great Depression. Sorry for the confusion!

          6 votes
  2. [3]
    boltsky
    Link
    The HN thread points out the 32.9% number is annualized, which can be misleading. The non-annualized Q2 number is 9.5%.

    The HN thread points out the 32.9% number is annualized, which can be misleading. The non-annualized Q2 number is 9.5%.

    6 votes
    1. [2]
      nacho
      Link Parent
      The 9,5% figure for Q2 is way, way worse. The BBC reports that this is equivalent to losing the last 5 years of GDP growth in 3 months. And that's after all the hundreds of billions of public...

      The 9,5% figure for Q2 is way, way worse.

      The BBC reports that this is equivalent to losing the last 5 years of GDP growth in 3 months. And that's after all the hundreds of billions of public spending pumped and dumped into the economy to boost growth and economic recovery after 2008. The debt is still there. The cuts and slashed budgets of the Trump-era are still there.

      Further, the drop in GDP is due to a lack of both supply and demand: People are buying less and working less because they aren't feeling safe. That isn't slated to change anytime soon, if we judge by the current Covid-situation.

      14 votes
      1. abbenm
        Link Parent
        How is it worse? It's the same number expressed a different way.

        How is it worse? It's the same number expressed a different way.

        1 vote