US economy posts its worst drop on record

Discussion in 'Latest US & World News' started by CenterField, Jul 31, 2020.

  1. CenterField

    CenterField Newly Registered Donor

    Joined:
    Jul 21, 2020
    Messages:
    321
    Likes Received:
    288
    Trophy Points:
    63
    Gender:
    Male
    https://www.cnn.com/2020/07/30/economy/us-economy-2020-second-quarter/index.html?utm_term=1596191080091fe45da76e431&utm_source=Five+Things+for+Friday,+July+31,+2020&utm_medium=email&utm_campaign=231346_1596191080093&bt_ee=6xg7eyXZFS1Ly15mqAYbfPLzwmc+l+8FLszXnO1t2Xf1ncM7L/9MR9r13cKSa6tF&bt_ts=1596191080093

    This is horrible. Our economy contracted between April and June at a 32.9% annualized rate, and that's the worst contraction in a quarter of all time ever since indexes started being measured (worse than any quarter in 1929). Our longest, 11-year economic expansion has ended. GDP went down by 5% the preceding trimester, January through March, thus characterizing a recession with two quarters in a row showing contraction and that was predictable, but the rate of it in April/May/June is just unprecedented.

    So, there was some employment recovery in May and June but now, in July, unemployment claims have increased for the second week in a row.

    https://www.cnn.com/2020/07/30/economy/coronavirus-unemployment-benefits/index.html?utm_term=1596191080091fe45da76e431&utm_source=Five+Things+for+Friday,+July+31,+2020&utm_medium=email&utm_campaign=231346_1596191080093&bt_ee=6xg7eyXZFS1Ly15mqAYbfPLzwmc+l+8FLszXnO1t2Xf1ncM7L/9MR9r13cKSa6tF&bt_ts=1596191080093

    1.4 million people filed for unemployment last week. On these bad news, the Dow and the SP500 fell slightly (0.9% and 0.4%) but Nasdaq actually went up by 0.4%; this is actually somewhat encouraging, that the markets aren't completely spooked.

    I'm also very worried because federal moratorium eviction has ended last Friday, potentially jeopardizing their housing for 12 million American renters. The Paycheck Protection Program is expected to expire August 8. Sure, Congress is negotiating more help and more stimulus, but we're in deep, deep trouble.

    While lockdowns had of course a lot to do with it, the sputtering economy now may be simply reflecting the fact that with the pandemic raging on and on, consumer confidence and business confidence remain down so the economic recovery is stalling.

    I just saw that 60% of restaurant closures are permanent and more will close.

    I wonder if we could have done something better, like a more robust payroll protection program.

    I wonder, when this is all over (maybe with a vaccine?), how long we'll need, in order to go to a pre-pandemic economy. Five years? A decade?
     
    Last edited: Jul 31, 2020
  2. Kev12345

    Kev12345 Newly Registered

    Joined:
    Jul 30, 2020
    Messages:
    168
    Likes Received:
    49
    Trophy Points:
    28
    Gender:
    Male

    Add to that a inflated economy kept up by tax breaks for the rich and cutting fed rates to keep it afloat. It was already on life support the pandemic made it probably worse than what it was going to be.
     
    Last edited: Jul 31, 2020
  3. CenterField

    CenterField Newly Registered Donor

    Joined:
    Jul 21, 2020
    Messages:
    321
    Likes Received:
    288
    Trophy Points:
    63
    Gender:
    Male
    I don't possess enough economic knowledge to know if what you said hurt the economy or helped it, because presumably heating it up this way also increased consumer spending and business growth with better employment so ultimately the federal income might actually grow. Which effect predominates I don't know and defer on this to those who know more about the macro economy than I do. In any case I think a contraction this big, a dip of GDP of 10% in a trimester with annualized rate 32.9% must be mostly attributable to the pandemic rather than to the previous tax structure.

    By the way I need to correct something; I subsequently saw more news on this and it seems like the biggest quarter contraction doesn't apply all the way back to 1929 but rather back to 1941 when these indexes started being calculate.
     
  4. Kev12345

    Kev12345 Newly Registered

    Joined:
    Jul 30, 2020
    Messages:
    168
    Likes Received:
    49
    Trophy Points:
    28
    Gender:
    Male

    Trickle down economics is a myth
    If you were a owner and just for the sake of the arguement you had 1 employee and ge was keeping up with demand would you hire another employee because you got a tax break. HECK NO. So when companies get tax breaks they do things like delta did and do a ton of stock buybacks to prop their companies stocks up that the board is all heavily invested in. This does very little bit for anyone but those stock holders

    This next part I know some but will say right now that I'm no expert either.
    Cutting the fed interest rate will get ppl to invest more that is true. However it is very reckless to be dropping the rate when the market is going good. The reason is simple the more the fes rate is the bigger the dollar is so our spending goes further plus the higher the rate the less budget we would have since the fed would be borrowing money out for more interest.
    The higher the fed rate is the more each of us will have to pay in interests on credit cards and loans and the like.


    The biggest reason you want the rate to gi up as the economy is going up so that when the next recession hits you have some wiggle room
    Right now we have zero room to go lower unless we go into negative rates which I've heard are not good st allfor a economy and had to get out of....
     
    CenterField likes this.
  5. Eleuthera

    Eleuthera Well-Known Member Donor

    Joined:
    Jun 13, 2015
    Messages:
    9,916
    Likes Received:
    3,945
    Trophy Points:
    113
    We can thank Fauci and the mainstream media for this. They are both fear-mongers and terrorists.
     
  6. 61falcon

    61falcon Well-Known Member

    Joined:
    Apr 27, 2018
    Messages:
    12,787
    Likes Received:
    6,355
    Trophy Points:
    113
    Gender:
    Male
    No, you can thank Dirty Donald and his totally inept administration for having absolutely NO FEDERAL POLICY TO COMBAT THE pandemic which has struck the world. We are 4% of the worlds population but we have 25% of the worlds Covid-19 virus cases and 25% of the worlds deaths from it.
     
    cd8ed likes this.
  7. CenterField

    CenterField Newly Registered Donor

    Joined:
    Jul 21, 2020
    Messages:
    321
    Likes Received:
    288
    Trophy Points:
    63
    Gender:
    Male
    I hear you. But when I was talking about it with a conservative friend one of these days, who knows much more about this than I do (he is a lawyer working for the financial side of a corporation), he said that after Trump's tax cuts, actually the federal revenue went up. I don't know if he was telling me the truth or BS'ing me due to his ideological and partisan bias.

    Me, I'm clueless. While I make good money, I don't know how to invest it. My wife is the financial genius in the family (self-taught; she bought and read a number of books on the subject) and she is the one who meets with our financial advisor and allocates everything in terms of investments, retirement plans, etc. She deals with the family budget and makes all the decisions regarding our money and she operates it all directly from our joint banking account. She brings stuff to me and says "sign here" and she deals with our accountant too, when it's time for the tax returns. By the way, she makes good money too. We're doing well as a two-income couple and our jobs are secure because we are both in an industry that is not subject to the downturn brought up by the pandemic (meaning, it's extremely unlikely that we'd be fired even if the economic crisis worsens).

    So, if I have some idea like going on an expensive vacation trip, I go to her and say, "I read about this great travel destination and this great hotel on Travel + Leisure magazine, look at this. We have vacations coming up in .... months. Will we have enough disposable money at the time to afford it without taking money out of where it's allocated?" She goes and says, "Hm... let me see; let me look at the daily rate there, air tickets, meals etc., and look at what we are projected to have floating around when it's time for our vacation." Half an hour later she says "Yes, we can afford it; let's book it."

    LOL, our household has "Departments" - we have a good system going. I'm the head of the "Department of Leisure" and I take the initiative of finding restaurants, shows, concerts, vacations, etc. (while she tells me if we can afford them). I'm the head of the "Department of Technology and Infra-structure" and I do all the Internet wireless network, TV streaming, I deal with the CPI company for the devices that protect the house, I buy and install and set up our hardware and computers, cell phones, and do general handyman work for repairs and house improvement projects, etc. I'm also the head of the "Department of Education" and I always took care of parent-teacher conference, homework assistance, college tours, etc., for our two kids. My wife, in addition to being the head of the "Department of Finances" is the head of the "Department of Transportation" (knows a lot more about cars than I do and buys our cars). She leads the "Department of Health and Nutrition" and she plans and cooks healthy meals, keeps an eye on the kids' vaccinations, medical appointments, health insurance, etc. She is also the head of the "Department of Glamour, Fashion, and Beauty", of course... picks our clothes, decorates the house, and makes sure that she, herself, looks darn pretty and sexy!

    Pardon the digression.
     
  8. yardmeat

    yardmeat Well-Known Member

    Joined:
    Aug 14, 2010
    Messages:
    25,008
    Likes Received:
    9,039
    Trophy Points:
    113
    There isn't a single thing correct in this post. Other countries acted MORE aggressively and have not had this level of economic contraction. Our contraction is largely due to dragging our heels and our inconsistent response, not from treating the disease TOO seriously. And calling someone a terrorist just for being scientifically accurate is both unhinged and dangerous.
     
    cd8ed and CenterField like this.
  9. Distraff

    Distraff Well-Known Member

    Joined:
    Feb 4, 2011
    Messages:
    9,445
    Likes Received:
    3,396
    Trophy Points:
    113
    If we had come down hard on this pandemic early on, we could have opened back up in March without social distancing. True fact.
     
    yardmeat likes this.
  10. CenterField

    CenterField Newly Registered Donor

    Joined:
    Jul 21, 2020
    Messages:
    321
    Likes Received:
    288
    Trophy Points:
    63
    Gender:
    Male
    I'm not sure about March since even the European countries that responded strongly (like Spain) took longer to control the outbreak, but yes, we could have done a lot better and not have this worsening and lingering of the contagion which is hurting the economy too, like the lockdown did. Better a strict lockdown, homogeneous and consistent, with strong payroll protection, and then beat the virus and come out of it strong, than wishy-washy measures with a lingering problem, in my opinion. Countries like Germany and Spain did a lot better with less economic impact and less unemployment.
     
  11. Distraff

    Distraff Well-Known Member

    Joined:
    Feb 4, 2011
    Messages:
    9,445
    Likes Received:
    3,396
    Trophy Points:
    113
    European countries did respond more strongly than we did. But it wasn't strong enough to prevent the need for social distancing, although it did reduce deaths. So they are going to have similar economic consequences since they won't be completely back to normal either. So I see a failure of leadership on their end too.

    Here is a proper way of doing it. When we heard all the horrible news from Wuhan, we should have banned all airports and shut down all borders, and required mandatory three weeks highly supervised quarantine for all travelers coming back. We should have spent billions to start free testing and tracing across our country, especially cities with foreign travel. If a US city gets hit, it should go under a tight lock down and not allow travel outside of it.

    In the case that we fail to properly respond early and the virus was spreading, we should have done a national lockdown and only opened up cities on an individual basis when they are basically clean of cases. We should have also done a national face mask and face shield order for going outside with mandatory social distancing. We should have also been investing billions to mass produce top-grade face masks, face shields, hand sanitizer, and gloves. We should also have been requiring that food stories enforce social distancing while under lockdown.

    When we open back up, we should still keep airports and borders tightly closed, but we wouldn't need social distancing anymore. We might keep the face masks around for a while just to be safe, except for eating.
     
  12. CenterField

    CenterField Newly Registered Donor

    Joined:
    Jul 21, 2020
    Messages:
    321
    Likes Received:
    288
    Trophy Points:
    63
    Gender:
    Male
    There is no doubt that these measures would have curtailed the contagion, but there are three problems: One, they would be hard to afford, economically. Two, production of PPE is so low in this country including, we lack the prime materials to make N95s and ASTM-grade surgical masks (the blown mesh that goes inside them; all gobbled up by China) that even with all this effort we might not be able to produce enough PPE domestically - which shows how woefully unprepared we were; Three, I doubt that given our cultural traits and political polarization, we'd have had the will and the spirit to pull it off. Ideally, yes, you are right. In reality I doubt we'd have been able to do it regardless of what party owns the White House and the Governors. I do believe we could have made steps in that direction and consequently, could have had a better outcome. But an entirely excellent outcome, I find that it was beyond our reach. It's easier to accomplish in a smaller, more homogeneous, more politically united country. In Japan, for example, the measures the government asked the population to implement were followed at 98% rate, even though they were not mandated. Japan's government simply had to ask and the population massively implemented what they were asked to do. Good luck trying this here... we politicize everything and what a party recommends the other one sabotages and vice-versa.
     
  13. Distraff

    Distraff Well-Known Member

    Joined:
    Feb 4, 2011
    Messages:
    9,445
    Likes Received:
    3,396
    Trophy Points:
    113
    We have already been in complete/partial lockdown for half a year with a lot more to go. If we had stamped out this virus by April, we could have afforded a couple months of down-time.

    And I'm sure we can find other materials as well for a somewhat weaker masks. Also consider that face shields are a great option to use with a weaker mask.

    I agree that the US wasn't ready to do the right thing and take on this virus effectively. But we only have ourselves to blame for our failure because it was totally preventable. To beat this virus, it doesn't just take government policy, we also need people to do the right thing. Unfortunately we weren't up to the task and brought this crisis on ourselves.

    And in Japan, the virus is coming back when people started to loosen up. This is the problem with how developed nations have been dealing with the virus. They are effective enough to get deaths and cases down. But they can't beat the virus, and have to live in a constant state of social distancing, unlike China. This social distancing does horrible things to their economy.
     
  14. Gentle- Giant

    Gentle- Giant Newly Registered

    Joined:
    Apr 29, 2020
    Messages:
    215
    Likes Received:
    187
    Trophy Points:
    43
    Gender:
    Male
    Even before the virus economist were predicting a down turn. It's probably Obama's fault right?
     
  15. CenterField

    CenterField Newly Registered Donor

    Joined:
    Jul 21, 2020
    Messages:
    321
    Likes Received:
    288
    Trophy Points:
    63
    Gender:
    Male
    I basically agree with everything you said. Good post. And yes, I thought that we should have invoked the Defense Production Act from the beginning and should have tried our best to beef up the domestic production of PPE; maybe like you said if we lack the materials for the very best ones, at least better than the pitiful cloth masks and the flimsy non-medical grade disposable facemasks people are forced to use, for lack of anything better. Face shields, you are right, but we've had trouble convincing people to wear facemasks, let alone face shields.

    It reminds me of a joke I heard:
    Guy says "Walmart is now requiring all costumers to wear facemasks"
    The other guy responds "Good luck with that; Walmart can't even get their costumers to wear pants!"
     
  16. PJO34

    PJO34 Well-Known Member

    Joined:
    Mar 25, 2004
    Messages:
    5,114
    Likes Received:
    73
    Trophy Points:
    48
    Well, you gotta admit, he is running the country the same way he runs his business. Winning!
     
  17. Giftedone

    Giftedone Well-Known Member Past Donor

    Joined:
    Jul 7, 2010
    Messages:
    45,518
    Likes Received:
    8,059
    Trophy Points:
    113
    The seeds of this economic disaster were sown long before Dirty Donald stepped into office - and it was up to the States and the End of the Day to encourage lockdown - an effort that was a complete failure. Certainly Donald was no help in this respect but nor did he have much to do overall Federal Actions - there is a machine that went into motion that is well beyond Donald's daily activities and pay grade.
     
  18. FreshAir

    FreshAir Well-Known Member Past Donor

    Joined:
    Mar 2, 2012
    Messages:
    95,636
    Likes Received:
    30,181
    Trophy Points:
    113
    way ta go Trump, and we thought Bush was bad.... Sad!
     
  19. FreshAir

    FreshAir Well-Known Member Past Donor

    Joined:
    Mar 2, 2012
    Messages:
    95,636
    Likes Received:
    30,181
    Trophy Points:
    113
    Trump declared a national emergency
    Trump shutdown the economy
    Trump is the decider, Trump decided
     

Share This Page