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* Oy…
Gross domestic product from April to June plunged 32.9% on an annualized basis, according to the Commerce Department’s first reading on the data released Thursday. Economists surveyed by Dow Jones had been looking for a drop of 34.7%.
Still, it was the worst drop ever, with the closest previously coming in mid-1921.
* And…
In yet another sign that the economic recovery is teetering in a resurgence of coronavirus cases, the number of Americans filing first-time unemployment claims rose for the second week in a row.
Some 1.4 million people filed for initial jobless claims last week, up 12,000 from the prior week’s revised level, which was the first increase in 16 weeks.
On an unadjusted basis, 1.2 million people filed first-time claims, down 171,000 from the week before. The seasonal adjustments are traditionally used to smooth out the data, but that has tended to have the opposite effect during the pandemic.
Continued claims, which count workers who have filed for at least two weeks in a row, stood at 17 million for the week ending July 18, up 867,000 from the prior week’s revised level. These seasonally adjusted claims peaked in May at nearly 25 million.
*** UPDATE 1 *** One Illinois…
The news was far better in Illinois, where new claims dropped 4,000 to 32,000 last week from 36,000 the week before. Claims for expanded federal benefits for independent contractors, freelancers, and so-called gig workers not eligible for conventional unemployment dropped precipitously, from a record 74,000 the week before to just 6,000 last week.
That PUA spike last week was really odd.
*** UPDATE 2 *** Press release…
“Today’s announcement of a 32.9 percent drop in U.S. GDP, the largest on record, reiterates what the Chamber has been saying all along - that the government must address both the economic and public health crises simultaneously,” said Illinois Chamber President and CEO Todd Maisch.
“These dual crises necessitate that the administration weigh the priorities of job creators on equal footing with the dictates of scientists. While Illinois is releasing daily public health metrics, we cannot have state government considering economic metrics as an inconvenient afterthought. COVID-19 has created both crises, but we have to recognize that government decisions have contributed to the implosion of our economy.
That is why the Chamber is reiterating our call for four actions:
· Suspension of the minimum wage increase, that makes it even harder for small businesses to reopen;
· Immediate suspension of support for the progressive income tax amendment, that will put another burden on job creators forcing them across state lines;
· A complete repudiation of CEJA, a piece of legislation that threatens all Illinoisans with increased energy costs; and
· A rapid review of regulations to reduce red tape and administrative costs on employers.”
posted by Rich Miller
Thursday, Jul 30, 20 @ 8:50 am
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By just shutting down and giving money to businesses, we wasted a lot of cash that could have just been given to workers.
Comment by 33rd Ward Thursday, Jul 30, 20 @ 9:03 am
If the pandemic was managed nationally from the beginning, and if we didn’t have so many uncooperative people, we’d be in better shape economically. Much of this is the product of a lack of national strategy. This pandemic failure and presidency is one of the lowest points in our history.
Comment by Grandson of Man Thursday, Jul 30, 20 @ 9:14 am
I would just like to mention GDP is a poor measure of the quality of life, it only measures value of goods and services. I refer anyone interested to read the article in the August issue of Scientific American about the problems created by focusing on GDP.
Comment by RetiredStateEmployee Thursday, Jul 30, 20 @ 9:18 am
I think we’ll be well into 2021 until we see any meaningful improvement. Hot spots will continue to develop and we’ll simply go from focusing on one group of states to another. We need to restore the U.S. economy as a whole and the only way to do that is to have a coordinated national response.
Comment by Pundent Thursday, Jul 30, 20 @ 9:19 am
And it keeps needing to be said: most of this could have been avoided by just requiring people to wear a mask indoors (by April it was established masks would slow the virus spread - subsequently we learned how much more effective it is compared to cleaning surfaces etc.). And we still don’t give them to people for free and let people ride the bus/trains without them.
I don’t know how “the market” can fix this. There was a report yesteerday that maybe 50% of the jobs lost to-date are not going to come back. IMHO, universal basic income funded by soaking the rich is the best way to go as it preserves the benefits of the free market system compared to trying to target relief - sorry, I know I’m getting WAY beyond the scope of this post!
Comment by lake county democrat Thursday, Jul 30, 20 @ 9:26 am
a lack of leadership at the Federal level has taken a crisis and multiplied the effect, the duration and the cost. Its easy for 40% of America to discount as a hoax, as not a big deal as that was the message by trump and echoed by foxnews (and still is. The great awakening of the true silent majority that we caught a glimmmer on in 2018 will be monumental. The idea that anti-science is the path america should take is insane
Comment by truthteller Thursday, Jul 30, 20 @ 9:28 am
The continuous UI claims is really 29 million if you include continuous PUA claims of 12 million.
https://www.dol.gov/sites/dolgov/files/OPA/newsreleases/ui-claims/20201487.pdf
Comment by 1st Ward Thursday, Jul 30, 20 @ 9:57 am
“by just shutting down and giving money to businesses, we wasted a lot of cash that could have just been given to workers.”
the majority of PPP money was used to pay workers. If it wasn’t used for workers it needs to be repaid. We did not waste cash on businesses.
Comment by 1st Ward Thursday, Jul 30, 20 @ 10:00 am
== We did not waste cash on businesses==
Like a Lamborghini for $318K?
https://www.washingtonpost.com/nation/2020/07/28/florida-ppp-coronavirus-lamborghini/
Comment by Jocko Thursday, Jul 30, 20 @ 10:30 am
=the majority of PPP money was used to pay workers=
If the ultimate goal was to pay workers why have a middle man? We know that auditing abilities don’t exist for these payments and there have been abuses (like Lamborghini purchases). The more hands this money has to pass through the more likely it is for that to occur.
Comment by Pundent Thursday, Jul 30, 20 @ 10:31 am
“We know that auditing abilities don’t exist for these payments and there have been abuses”
Banks are verifying the information on the back-end to see if its eligible to be a grant. $500Bn has been dispersed and the “abuse” is a $318K lambo in which the guy was arrested? Should we not have UI since there’s been fraud in that system? Do better.
Comment by 1st Ward Thursday, Jul 30, 20 @ 10:55 am
=GDP is a poor measure of the quality of life=
Correct. It is a good indicator (especially over time) of economic out put though.
=== We did not waste cash on businesses==
Like a Lamborghini for $318K?=
And how did that end up for that dude? That is a poor response to the “we didn’t waste money on businesses” argument. One case of fraud that is now being prosecuted. The PPP had more wins than loses.
=The more hands this money has to pass through the more likely it is for that to occur.=
Unsurprisingly, Pundent makes a good argument for adjusting the approach. Well done sir.
= Much of this is the product of a lack of national strategy. This pandemic failure and presidency is one of the lowest points in our history.=
Yep. I could not agree more.
When states are left to compete with one another for vital PPE supplies it creates an environment of “profiteers on steroids”. There will always be profiteers in a crisis.
Only the federal government has the resources and personnel capacity (unless the administration guts that capacity) to effectively address a pandemic. It is the same reason we have FEMA to bail pouty states after hurricanes and other large scale natural disaster. This is a qualitative function that is not well suited for the “market” approach.
In a matter of weeks the president could have authorized the creation of large scale medical facilities via FEMA, the military, and Army Core of Engineers operating in concert under presidential order. Using medieval capabilities the areas where capacity was overburdened could have been mitigated and lives could have been saved. That power could have been used more forcefully to direct US manufacturing to focus on PPE.
This happened in a few places, randomly and not cohesively.
In comparison Illinois is a leader, and JB looks pretty good comparatively.
Comment by JS Mill Thursday, Jul 30, 20 @ 10:56 am
Consumer spending is 70% of GDP.
Just keep mailing out those darn $600 checks.
We need to channel FDR.
Comment by TinyDancer(FKASue) Thursday, Jul 30, 20 @ 11:47 am
- necessitate that the administration weigh the priorities of job creators -
Hey Todd, just tell them to “Hang in there.”
Truly diseased mind on that one.
Comment by Excitable Boy Thursday, Jul 30, 20 @ 12:03 pm
===… that the government must address both the economic and public health crises simultaneously,” said Illinois Chamber President and CEO Todd Maisch.===
You can’t have an economy when there’s a pandemic raging.
You can’t simultaneously think that the sameness of the economy before the pandemic and now is needed.
Next time say, “let them eat cake, but get back to work”
Maisch rarely helps.
Comment by Oswego Willy Thursday, Jul 30, 20 @ 12:06 pm
Media outlets need to be honest about the GDP numbers. It’s down 32% on an annualized basis and 9.5% on a quarterly basis. The quarterly basis is more accurate. Europe and Asia report quarterly numbers not annualized based on each quarter.
Comment by 1st Ward Thursday, Jul 30, 20 @ 3:09 pm
=== Media outlets need to be honest about the GDP numbers. It’s down 32% on an annualized basis and 9.5% on a quarterly basis.===
LOL
Both are honest.
Comment by Oswego Willy Thursday, Jul 30, 20 @ 3:19 pm
“Both are honest.”
They aren’t. It’s headline porn. Expectations of QoQ growth of 13.3% for Q3. On an annualized basis this would be 50%+. To have a headline one quarter of negative 32% annualized growth and the next quarter have positive 50%+ annualized growth makes no sense.
https://www.newyorkfed.org/research/policy/nowcast
Comment by 1st Ward Thursday, Jul 30, 20 @ 3:34 pm
=== They aren’t. It’s headline… ===
No. It’s not unlike a rolling average. It’s honest. You may not like it, but…
===Expectations===
… are different than actual.
Right now, it’s -32.9% .
When that 3rd quarter happens, they’ll adjust.
If they don’t, then your beef on “honest” might work.
Comment by Oswego Willy Thursday, Jul 30, 20 @ 3:39 pm
1rst ward,
Thanks you cleared up something I was curious about. I noted that Germany’s economy was down 10.1% quarter over quarter and when I saw ours was 32% I was freaked out until I realized it was a different metric. Then I was wondering what our quarter over quarter number was.
Comment by cermak_rd Thursday, Jul 30, 20 @ 3:49 pm
1st Ward,
I see value in reporting GDP both ways normally. The annualized basis helps people get an idea what the year will look like. When you have a huge short term change, though, the number gets distorted like this. I don’t know of any economists who actually expects a 30% drop in annual GDP.
Comment by Pelonski Thursday, Jul 30, 20 @ 3:57 pm