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  1. #1021

    Re: The Failing Economy

    This explains Tiny's "sudden" interest in delaying the election, something Mr. Biden predicted he would do back in April.

    U.S. economy contracted at fastest quarterly rate on record from April to June as coronavirus walloped workers, businesses
    Data released by the Commerce Department on Thursday is another reminder of the pain felt this year as the nation went into an economic shutdown.

    Rachel Siegel and
    Andrew Van Dam
    July 30, 2020 at 12:21 p.m. EDT

    The U.S. economy shrank 9.5 percent from April through June, the largest quarterly decline since the government began publishing data 70 years ago, and the latest, sobering reflection of the pandemic’s economic devastation.

    The second quarter report on gross domestic product covers some of the economy’s worst weeks in living memory, when commercial activity ground to a halt, millions of Americans lost their jobs and the nation went into lockdown. Yet economists say the data should also serve as a cautionary tale for what is at stake if the recovery slips away, especially as rising coronavirus cases in some states have forced businesses to close once again.

    On Thursday, the government also reported that jobless claims increased once again last week to 1.4 million, another sign any recovery is stalling out.

    GDP shrank at an annual rate of 32.9 percent, according to the Bureau of Economic Analysis, the agency that publishes the statistics on quarterly economic activity. While it usually stresses the annualized rate, that figure is less useful this quarter because the economy is unlikely to experience another collapse like it did in the second quarter.

    Still, while a tailspin at the second quarter rate is unlikely, the nascent recovery that began appearing earlier this summer appears to be in jeopardy.

    On Wednesday, Federal Reserve Chair Jerome H. Powell warned that the most recent surge in infections has begun to weigh on the economy, while reemphasizing a recovery cannot be sustained unless the virus is under control.

    “We’re still digging out of a hole, a really deep hole,” said Ben Herzon, executive director of IHS Markit. “The second quarter figure will just tell us the size of the hole we’re digging out of, and it’s a big one.”

    Thursday’s report offered another economic snapshot of people staying home, cutting back their spending and overhauling their normal routines. The second quarter saw stark drops in sales of clothing, footwear and gasoline, along with food service, health care and transportation services.

    At the same time, real disposable personal income rose nearly 10 percent, largely due to direct stimulus checks and enhanced unemployment benefits under the Cares Act. Auto sales rose, along with recreational goods and vehicles. Housing and utilities services went up, as did farm inventories.

    This was the worst quarter since at least 1875, according to a historical data set created by economists Nathan Balke and Robert Gordon. The runners up are the third quarter of 1893, when a legendary panic and run on the banks caused a crippling depression, and the fourth quarter of 1937, when the Great Depression returned with a vengeance. Those quarters saw declines of 8.4 percent and 7.2 percent, respectively.

    Until now, no quarter in the modern era of GDP measurement, which began in 1947, had seen a decline of even 3 percent. The worst was — 2.6 percent in 1958, amid a depression that coincided with a devastating pandemic known as the “Asian flu.”

    A key factor in the economic recovery may be what lawmakers do.

    Congress is divided over another round of stimulus, including over whether to extend enhanced unemployment benefits, which otherwise expire Friday. In California, Arizona, Texas, Florida and Michigan, intensifying outbreaks have forced authorities to dial back their reopening plans and restrict business activity once again.

    Jobless claims rose for the second week in a row, adding to worries about how vulnerable much of the workforce remains as enhanced unemployment benefits are due to expire.

    Markets felt the shock of Thursday’s GDP figures. By late morning, the Dow Jones Industrial Average was roughly 460 points in the red, or 1.7 percent. The Standard & Poor’s 500 index and the Nasdaq composite dropped 1.3 percent and 0.8 percent, respectively.

    The GDP figures show how severely the economy suffered and could “jolt Congress into action” heading into August, said Wendy Edelberg, director of the Hamilton Project and a senior fellow in economic studies at the Brookings Institution.

    “One thing that policymakers, and all of us readers of this report, can take from it is that this is the outcome we want to avoid,” Edelberg said. “We want to avoid having to go through such a dramatic shutdown again, because this is the pain that it causes.”

    For all the talk of a V, W or U-shaped recovery, Sung Won Sohn, professor of finance and economics at Loyola Marymount University and president SS Economics, said a “Y-shaped,” or “sideways” expansion is in progress.

    “The pandemic has created winners (top portion of Y sideways) and losers (bottom portion of Y sideways) widening the economic cleavage in the economy,” Sohn wrote in an analyst note Thursday morning.

    The economy collapsed in April on the heels of a nationwide shutdown. That month, the unemployment rate spiked to the highest level since the Great Depression. April retail sales plunged 16.4 percent, the largest drop on record.

    In May, big-name companies started filing for bankruptcy, including retailer J.C. Penney and rental car company Hertz. At the same time, states began easing restrictions on gatherings and businesses, igniting new hopes for a surprising turnaround. The May unemployment rate dropped as the labor market picked back up and retail sales popped 17.7 percent. President Trump and other White House officials said the nation was on track for a V-shaped recovery, even as the Federal Reserve emphasized that controlling the virus was key to a sustained turnaround.

    The economy added a record number of jobs in June, as the workforce recovered about one out of three jobs lost during the crisis. But measurements for June’s report were taken when the wave of coronavirus cases was at a low ebb in the United States — 35 states set new infection records in July alone.

    There are new signs the economic recovery is faltering, and Powell, the nation’s top economist, has noted that rising coronavirus cases are beginning to weigh on the economy. On Wednesday, Powell said some measures of consumer spending, based on debit card and credit card use, have moved down in the past month. Hotel occupancy rates have flattened out, he said, and Americans are not going to restaurants, gas stations and beauty salons as much as they had been earlier in the summer.

    “On balance, it looks like the data are pointing to a slowing in the pace of the recovery,” Powell said during a news conference Wednesday. “I want to stress it’s too early to say both how large that is and how sustained it will be.”

    Kelly Lightfoot, 50, has run Happy Kids Maui, a child-care business, for more than two decades. In good times, she goes “100 miles an hour” managing the office staff and between 50 and 80 nannies who watch the children of vacationing tourists on three islands.

    But in March, Hawaii’s governor locked the state down and adopted a strict quarantine that all but stopped the flow of visitors from the mainland.

    Business came to a screeching halt, she said: “It was our spring break. We had big, giant bookings for March, April, May — I had to refund all that money.”

    A recent Yelp analysis found Hawaii has been hit harder by coronavirus-related business closures than any other state. Lightfoot said she has slashed her spending during the lockdown. All the paychecks and expenses she would have put into the islands’ economy between March and September have gone for good. But she is still paying two office staffers, because she is determined to reopen and cannot afford to lose skilled workers.

    “We’ve been around for too long to just throw in the towel,” Lightfoot said. “I started from pretty much nothing. I’m sure I can do the same thing again.”

    For two decades, Richard Merle, 66, has moved works of art between galleries, museums, studios and tony residences in and around New York City. His company Lateral Move was stable and he hoped to sell it to fund his retirement. But now it’s essentially worthless.

    Merle and some of the best employees in his specialized crew were in high-risk groups, so they stopped work as soon as the state locked down in March, at the tail end of the art world’s busy season.

    During the lonely weeks of lockdown, he wavered between determination (“I’ve worked too hard for this business, I can’t close it”) and acceptance (“There’s a pandemic in the city. We can’t just keep running around. And we don’t know what the future holds”.) Meanwhile, the pandemic dragged on with no end in sight.

    “In May, I decided there was no point in reopening,” said Merle, who has sold his box truck, tools and other assets. “I just didn’t see a future for the business. I saw going back into debt and scrounging for the next couple years.”

    The Commerce Department’s GDP data go through multiple revisions, even in normal times. Now the pandemic is only amplifying the uncertainty in the process. Constance Hunter, chief economist at KPMG, said later revisions will help clarify what happened with imports and exports, for example.

    With so many questions hanging over the economy, rapid data on restaurant closures, foot traffic, even visits to doctors will help fill in the spotty picture of what is happening across the nation, Hunter said.

    She said it is more helpful to think about economic activity during the pandemic in what she is dubbing “FOGO,” or a “fear of going out.” That gauge will be key to understanding when people feel comfortable easing back into their pre-pandemic routines. “And covid is going to drive the bus on that,” she said.
    “No matter how cynical I get, I just can't keep up.” – Lily Tomlin.

  2. #1022

    Re: The Failing Economy

    Devil's advocate. What could a Hillary administration have done better?
    Face it. It's the apocalypse.

  3. #1023

    Re: The Failing Economy

    Quote Originally Posted by ponchi101 View Post
    Devil's advocate. What could a Hillary administration have done better?
    For that quarter not much, but the virus could have been dealt with much better. Then US would be in a similar situation as Canada is now and thus would have much higher likelihood of recovery in the next 2 quarters.
    Roger forever

  4. #1024

    Re: The Failing Economy

    Emphatically, what Suliso said!!!!!! There is SO much that could have been done better relative to the virus, and would have been done better with her as president. I have to believe that, in the long run, that would also be better for the economy. There would have been a big economic hit initially (which, according to Mitch McConnell, would have ben 100% her fault), but it would have been less long-lasting and it would have been dealt with far better. GH

  5. #1025
    Director of Nothing
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    May 2006
    New York, New York, United States

    Re: The Failing Economy

    I actually thing a lot of Republican governors would have "rebelled" and defied federal guidelines if she were President, but the crucial early testing would certainly have been better organized and the CDC wouldn't have lost its reputation, so there'd be less confusion about what is/isn't effective.

  6. #1026

    Re: The Failing Economy

    Unfortunately, I think your first phrase is exactly true, mmmm8. GH

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