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United States News

US Economy Shrinks at 4.8% Pace, Signaling Start of Recession (bloomberg.com) 345

The record-long U.S. economic expansion is over after almost 11 years, with what's likely to be the deepest recession in at least eight decades now under way. The world's largest economy shrank at a 4.8% annualized pace in the first quarter, the biggest slide since 2008 and the first contraction since 2014, as the need to fight the coronavirus forced businesses to close and consumers to stay home. From a report: The current quarter is likely to be far worse, with analysts expecting the economy to tumble by a record amount in data going back to the 1940s. Bloomberg Economics has projected a 37% annualized contraction, but UniCredit is the most bearish with a 65% estimate. The first-quarter downturn, reported Wednesday by the Commerce Department, was led by the steepest drop in consumer spending since 1980 and the fastest decline in business investment in almost 11 years. The worse-than-expected report reveals the wide-scale hit to U.S. output from Covid-19 and the subsequent freezing of economic activity. "It's kind of incredible when you think about the fact that the economy was running pretty much on a normal footing for over 80% of the first quarter," Stephen Stanley, chief economist at Amherst Pierpont Securities LLC, said on Bloomberg Radio. U.S. stocks gained amid renewed hopes for a drug to fight the coronavirus, helping investors shrug off the GDP data. The dollar slipped and Treasury yields were lower.
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US Economy Shrinks at 4.8% Pace, Signaling Start of Recession

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  • by syn3rg ( 530741 ) on Wednesday April 29, 2020 @11:31AM (#60004018) Homepage
    Especially about the future.
  • by smooth wombat ( 796938 ) on Wednesday April 29, 2020 @11:32AM (#60004022) Journal
    U.S. stocks gained amid renewed hopes for a drug to fight the coronavirus

    People are expecting more socialist payouts to companies added onto the back of the taxpayers.
  • Gee who would have thought shutting down a large portion iof the economy would cause it to shrink.
  • by reanjr ( 588767 ) on Wednesday April 29, 2020 @11:33AM (#60004028) Homepage

    Trump was right. I'm tired of all this winning.

    • Trump was right. I'm tired of all this winning.

      Odd how he never boasts about that prediction anymore -- not even "sarcastically".

  • by RyanFenton ( 230700 ) on Wednesday April 29, 2020 @11:42AM (#60004072)

    I agree that this is a 'bear' market - but I don't think this is the same as a 'normal' recession.

    I'd call this a 'hibernation', in the bear sense. The stock market did flop at the initial stages of the Covid-19 onset, because it didn't know what to do. But every third day, it popped back up a lot, because people didn't know what else to do with their money to maximize their outcome, so they picked something to reinvest in.

    Eventually, that stabilized, and we're still at a very high market compared to the start of the Trump era.

    Not that ANY of this is good - in fact, I'd call it all kind of a stupid way to judge the 'economy' - because we're really measuring the global pool of money's trading card value with all this, rather than real health of our world.

    But - because we are all kind of crazy and stupid, and rely on these silly numbers to describe the 'economy' - those numbers are most likely going to kind of sleep until the crisis resolves.

    Again - because there's really not any other place for that money to go, for the entities compiled to manage and maximize that money.

    Even if a mini-mad-max scenario happened when real important things broke down for a long while, the 'economy' would likely still 'look' good.

    Because the modern version of 'economy' is a very, very broken metric mostly used for the comfort of the comfortable, and gamed and judged exactly to those ends.

    If you defined recession based on how it affected the average person - we've been in a recession for over 40 years.

    Ryan Fenton

    • Re: (Score:3, Informative)

      The stock market doesn't really reflect current earnings, it seem obvious to me that the market expects a vaccine in the near future.
      To put the 4.8% current and the 37% or 65% projected gdp drop in perspective, the 2008 recession had gdp drop of less than 1% (US), during the great depression -15% (ww) Greece during debt crisis -25%. (sources https://en.wikipedia.org/wiki/... [wikipedia.org] https://en.wikipedia.org/wiki/... [wikipedia.org] )

    • Actually there is someplace for that money to go. An awful lot of the money on corporate books is ultimately debt owed by someone else. When the economy contracts and companies start going bankrupt, a lot of money simply vaporizes due to debts that will never be repaid.

      If that seems strange, remember that most money doesn't physically exist. There isn't a dollar bill somewhere for each dollar on some company's balance sheet. Not even close.

      Personally, I hope this is just a pause, but I doubt it. I think

    • This is a hot take I will come back and laugh at for years. And for the last f*cking time, the DJIA is not an accurate measure of the economy
    • by Kjella ( 173770 )

      I agree that this is a 'bear' market - but I don't think this is the same as a 'normal' recession. I'd call this a 'hibernation', in the bear sense.

      Yeah, the normal problem is people don't have money. But whenever they talk about all the canceled tourism and events and whatnot, the people who would have gone still have their money. More money than usual actually, because they sat at home doing nothing rather than spending or worked 12 hour shifts at the hospital. So what happens when the restrictions lift and they're allowed to spend again, is there a ketchup effect coming? I don't know and I don't think anyone else does either, we're in rather unchart

    • by Junta ( 36770 )

      I would add that as far as the impetus for a recession goes, a disease that (presumably) will ultimately be under control is a relatively more straightforward phenomenon to respond to economically than typical recession.

      In a typical recession, the way back is pretty nebulous. For some set of convoluted circumstances and sentiment, suddenly a critical mass of the population decide the numbers aren't right somehow and then things fall apart. In those circumstances there isn't a clear 'recovery' event to ins

    • by RobinH ( 124750 )

      Investors look at money, but if you're a government your goal is to maximize productivity of your labor force. It's typical for us to think about productivity in terms of the only metric available (money) but the real thing you want to maximize is total "value" in both a qualitative and quantitative sense produced by your economy. In that sense, the money traded for things is a convenient placeholder for how much relative value people put on things. We know a cow is worth more than a sheep because people

  • by WindBourne ( 631190 ) on Wednesday April 29, 2020 @11:53AM (#60004130) Journal
    I am guessing that just about every northern nation has taken a major hit.

    However, while WHO and worldometer record relatively low numbers of covid deaths in many nations, It appears that many nations are either inept or lying about the real number of covid deaths. [ft.com] If they are lying about covid deaths, then the implication is that they will lie about their economy as well.
    • Re: (Score:2, Insightful)

      by Jarwulf ( 530523 )
      The US now has one of the highest per capita testing in the world. Notice how everybody in the media is now either completely uninterested in testing or is still parroting the claim that the US is still failing in this regard compared to the rest of the world.
      • by jljljl ( 6814124 )

        The US now has one of the highest per capita testing in the world. Notice how everybody in the media is now either completely uninterested in testing or is still parroting the claim that the US is still failing in this regard compared to the rest of the world.

        Source?

        CDC at ~518k tests and census.gov places population at 380m means we've tested 0.13% of the population.
        Barely above one in a thousand. How come we, as the United States, with the highest GDP by nearly 150%, can't manage to keep up with other countries? I would regard this as "still failing".

        But that is "compar[ing] to the rest of the world". Why should we be comparing ourselves to other countries? Should we not be saying the health of our citizens is of high priority? Why only a test per thousand pe

    • I am guessing that just about every northern nation has taken a major hit.

      However, while WHO and worldometer record relatively low numbers of covid deaths in many nations, It appears that many nations are either inept or lying about the real number of covid deaths. [ft.com] If they are lying about covid deaths, then the implication is that they will lie about their economy as well.

      That's not really what the article says. To put the figures of excess deaths in relation to the reported covid deaths I posted this list yesterday based on the FT article (notice how some countries reports covid deaths way above excess deaths, Denmark 334%, Sweden 81%, France 41%, Italy 25%):
      The FT article was published 26 april compared to John Hopkins covid-19 death figures from today[yesterday]. FT listed England and Wales JHU only has UK so excluded.
      Country; death toll above average; reported covid-19 d

  • A 4.8% annualized contraction over a quarter means it shrank by 1.2%. A 37% contraction this quarter would mean shrinking by 9.25%. But it seems like right now we've shut down everything that we're going to shut down, and by next quarter, come hell or high water, the people pressuring the politicians to open the economy by definition have more pull on them than health experts (I'm quite sure health experts can't match them in campaign donations) so it's going to start opening back up even if that means lo

  • "The record-long U.S. economic expansion is over"

    That's a rather bold statement. Currently, it's obvious that a catastrophe has halted our economy. But the difference in this financial problem is it's not one that was created by poor economic policy, poor banking products, or mismanagement.

    Before the necessary halt, our economy was healthy. Historically when the US is faced with this type of calamity (think war) we do very well financially.

    You can't just halt trade for 60 days and expect there not to be iss

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