The U.S. Economy Is Down By 50% -
Where Are the Job Programs It Needs?
By Moon Of Aalabama
June 05, 2020 "Information
Clearing House" - The U.S. has a service
economy. Some 70% of its gross domestic product is
generated by personal consumption. The emergency
measures taken to slow down the covid-19 pandemic
decreased consumption by a huge margin. The GDPNow model
by the Federal Reserve Bank of Atlanta
shows the slump:
The growth rate of real gross domestic product (GDP)
is a key indicator of economic activity, but the
official estimate is released with a delay. Our
GDPNow forecasting model provides a "nowcast" of the
official estimate prior to its release by estimating
GDP growth using a methodology similar to the one
used by the U.S. Bureau of Economic Analysis.
Latest estimate: -52.8 percent — June 1,
The GDPNow model estimate for real GDP growth
(seasonally adjusted annual rate) in the second
quarter of 2020 is -52.8 percent on June 1, down
from -51.2 percent on May 29.
The Big Picture -
The GDPnow model gives a snapshot of GDP on any given
day. It is not the GDP for the year, which will be down
much less, but just a moment in time.
With the lockdowns loosening the GDP will certainly
increase again. But a haircut missed due to the lockdown
will not result in a desire to get two haircuts. The
meals not eaten in a restaurant during the last two
month will not be made up by additional meals eaten
after the reopening. The losses are for real.
With the end of the lockdown half of the
40 million currently unemployed will likely
soon be back to work. The jobs of the other
20 million will not come back for a long
time. The travel and hospitality sectors
will be most effected. People who do not
make money can not spend any.
The unemployed and the economy will not be impressed
by Trump's current fake 'law and order' show or by his
pandering to Evangelicals.
If Trump is as smart as he claims to be he will ask
Congress for a huge amount of money to be spent on
infrastructure programs over the next three years. That
money should be shared for projects on the national,
state and local level. There are plenty of bridges,
roads and rails that need repairs or replacements.
But Trump isn't as smart as he claims and the people
around him, as well as Trump himself, are from the FIRE
economy - the Finance,
Insurance, and Real Estate sectors. Such people do
not value the real economy where real stuff is
made and used.
The stock market, on which Trump is fixated, has long
ceased to be a reflection of the real economy. Propping
it up again and again,
as the Fed and the Treasury do, may well enrich
Trump's friends, but it does nothing for the voters he
needs to get reelected.
Does he not understand that?
And why, by the way, ain't the Democrats out in front
demanding that more be done to create new jobs? They
seem to have totally vanished from the scene.
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