Courtesy of Pam Martens
By Pam Martens and Russ Martens
At 9:10 a.m. this morning, Dow futures were showing a loss of 623 points, signaling another nasty open for the stock market following Monday’s plunge of 650 points and a 222-point loss yesterday. The sell-off in futures this morning is being blamed on the rising number of COVID-19 cases in Europe and the U.S. and the failure of the U.S. Congress to pass a stimulus bill to cushion the coming economic fallout.
But tomorrow morning will bring a report showing a huge pop in Gross Domestic Product (GDP) for the third quarter, and the Trump campaign can be expected to spin it into a rallying cry at campaign events. At 8:30 a.m. tomorrow, the Bureau of Economic Analysis, a unit of the U.S. Department of Commerce, will report how the U.S. economy grew from July 1 through September 30. According to the highly reliable Atlanta Fed’s GDPNow estimate, that figure should come in at the 30 percent range.
The Trump campaign can be expected to herald that number as the fastest growth in U.S. history. But it should be remembered that it comes on the heels of the second quarter number, which registered the largest quarterly loss in GDP in U.S. history, a decline of 31.4 percent. That monster decline resulted from business closures and job losses from the pandemic, and the resultant pullback in spending.
Both of the headline numbers need to be taken with a grain of salt. GDP is reported at an annualized rate, that is, what the quarterly percentage would be if it lasted for a full year. The loss in the second quarter of 31.4 percent annualized, actually equates to 9 percent on a quarterly basis. That’s still a big deal and on a par with a great depression.
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