Courtesy of Pam Martens
By Pam Martens and Russ Martens: July 29, 2020 ~
The very reliable GDPNow forecasting model provided by researchers at the Atlanta Fed was just updated this morning and currently predicts that Gross Domestic Product (GDP) in the United States contracted by a jaw-dropping -32.1 percent on a seasonally-adjusted, annualized rate in the second quarter. The public will get the official number from the Bureau of Economic Analysis (BEA) at the U.S. Department of Commerce at 8:30 a.m. tomorrow morning.
It’s expected that the second quarter GDP number will be the largest decline since quarterly GDP records began being compiled by the BEA in 1947. It is also expected that the number will be exponentially worse than any quarter during the Great Recession of 2007 to 2009.
As the chart above indicates, after the precipitous economic declines in April and May, resulting from the effects of business closures and layoffs to halt the spread of COVID-19, the GDPNow model was predicting far worse on June 4 – a decline of -53.8 percent for second quarter GDP based on data coming in at that time. The money flowing from the Fed and the CARES Act legislation has significantly cushioned the downturn.
GDP is the value of the goods and services produced in the United States. The growth rate of GDP is the most widely-watched indicator of the nation’s economic health and is widely monitored and reported by news media around the world. It is used by businesses to make decisions on investment and hiring and by policymakers like the Federal Reserve to adjust monetary policy.
…
