Posted on 04/29/2020 6:07:04 AM PDT by John W
Gross domestic product fell 4.8% in the first quarter, according to government numbers released Wednesday that provide the first detailed glimpse into the deep damage the coronavirus wreaked on the U.S. economy.
Economist surveyed by Dow Jones had expected the first estimate of GDP to show a 3.5% contraction.
This marked the first negative GDP reading since the 1.1% decline in the first quarter of 2014 and the lowest level since the 8.4% plunge in Q4 of 2008 during the worst of the financial crisis.
The biggest drags on the economy were consumer spending, nonresidential fixed investment, exports and inventories. Residential fixed investment, which jumped 21%, along with spending from both the federal and state governments helped offset some of the damage.
Consumer expenditures, which comprise 67% of total GDP, plunged 7.6% in the quarter as all nonessential stores were closed and the cornerstone of the U.S. economy was taken almost completely out of commission.
(Excerpt) Read more at cnbc.com ...
Never mind, DOW stock futures up 378.
Second quarter is going to be the real disaster.
Another remdesivir bump. Haven’t there been a couple of those previously? Hopefully this one holds.
The bubble is gone.. Could be time to invest for the future..
The stock market remains the best prognosticator of where things are heading because it’s based largely on business expectations.
My colleague at UCSB Steven DeCanio produced the very best assessment of the Great Depression where he showed that after the minimum wage went in as part of the NIRA, business expectations crashed and never returned.
Yet the doom and gloomsayers were saying -30%. Not 30% decline from 4th in 2019, but negative 30%. Ridiculous. Oil alone would probably account for at least one quarter of that 4%. All in all, not bad.
Now I’m wondering if the ChiComs didn’t drop this virus to remodel the landscape of the trade deal between the US and the CCP.
Yet the doom and gloomsayers were saying -30%. Not 30% decline from 4th in 2019, but negative 30%. Ridiculous. Oil alone would probably account for at least one quarter of that 4%. All in all, not bad.
My local barbershop did not close until March 23rd. Just saw the sign yesterday. That’s only 1 week of the first quarter with lost sales, obviously. Looks like they will be at zero sales for nearly all 12 weeks of the 2nd Q. Multiple that by the rest of the country and -20% GDP seems realistic.
Is that all? From all the talk, I thought it would be 25%
Not bad at all. We will recover from this when commerce is back up.
Let’s not all act like this came out of nowhere. The cause is identified.
Dow Futures rose sharply immediately after this GDP report was released. Clearly investors thought these numbers were better than they might have been. The original “remdesivir bump” wasn’t really one either, as that was the day that Trump announced his reopening guidelines and people could start to see the light at the end of the tunnel. The DNC media just likes to look for any excuse to not give Trump any positive news.
For those saying this isn’t bad... it isn’t... yet. The economy was shutdown starting around mid-March. That’s about two weeks at the end of the quarter. It has been shutdown for all of the second quarter so far. First quarter was expected to be negative... this is more negative than expected... and oil is a big player in the number. Make no mistake, though... the big negative will be the second quarter and it will set a record.
Recovering from this will be interesting to watch. We’ve never done either of these things... the shutdown nor the reopening. Prayers encouraged...
The stock market - right now - remains the biggest manipulated thing going. It wouldn’t be anywhere near what it is had the Fed not pumped trillions (yeah-The FED that many FReepers wanted abolished 6 months ago) into it and if they weren’t increasing their balance sheets tens of billions per night. During QE# (insert number here), the FED pumped less per month than they now do per night at times. It used to be a prognosticator-but without FED intervention it would be in the tank and wouldn’t indicate ANYTHING but disaster- and that’s a fact.
Meh. We are still . . . still, after 30 years . . . in a period of real deflation.
This is due to China exporting deflation; the as-yet STILL under-counted and under-valued implications of the computer revolution (See John Gordon’s book massively re-evaluating the way the GDP over the years showing it has substantially undercounted real growth. If that was the case then, it’s the case x10 today with the computer revolution).
So, no, the market is still a very, very good predictor. That crash two months ago was precisely in expectation of last month’s poor results. But I think business expectations are extremely high, and will only grow once people say “screw you” to the fear/panic mongerers.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.