Comment by chollida1 | Hacker News Reader

Comment by chollida1 | Hacker News Reader

This is getting into scary territory given that the US also spent 3.5 trillion to prop up the economy.

Some more "fun facts":

- this is the biggest drop on record for GDP: 32.9%.

That far surpasses the previous historical contraction of 10% in 1958.

- 19th reporting period where initial jobless claims came in above 1,000,000 that is stunning

- Personal consumption: -34.6%

- Government spending: +2.7%

- 2Q GDP Price Index Falls at A 1.8% Annual Rate

- Domestic investment: -49%

- 2Q Core PCE Price Index Falls at A 1.1% Annual Rate

- 17 million people collecting money from teh government

- 2Q Personal Consumption Falls at 34.6% Annual Rate

and the kicker

When you compare the last three years of Obama’s Presidency vs. Trump’s first three years, Trump’s deficits will be almost $1 trillion greater at $2.47 trillion to $1.51 trillion for Obama. It doesn’t look like Trump’s tax cuts will pay for themselves.

The US under Trump will add about the same amount to the nation debt in 4 years as Obama did in 8 and Obama inherited the "great recession"

https://www.whitehouse.gov/wp-content/uploads/2020/02/budget...

For those of you who like to dive into the numbers

https://www.bea.gov/sites/default/files/2020-07/tech2q20_adv...

From Bloomberg:

- Some categories actually added to GDP: consumer spending on cars, recreational goods, housing and utilities (as people worked from home and ran air conditioners longer?), and financial services and insurance.

- Other categories in positive territory: information processing equipment at companies (all other categories detracted from GDP), net exports, and government spending.

- China has only bought about 23% of its promised purchases for the year from the phase 1 trade deal so we probably can't look to China to buy the US out of its depression

There's also a significant lag on many indicators because individuals and businesses have some buffers, either provided by government or their own financial elasticity.

A couple of examples: many businesses reliant on tourist seasons will not have begun to feel the pinch until very recently, and will lag behind others in showing up in the reporting for most indicators.

In the UK, the government furlough scheme means that the true picture of joblessness will only become apparent once people are removed from furlough and laid off.

It seems to me (not an economist) that Q4 will be extraordinarily difficult and it's hard to see optimism for a pan-European recovery beginning until Q2 2021.

The US is in a significantly worse position and many seem to expect states to continue with severe restrictions to simply prevent the further spread of the virus until the summer of next year, let alone beginning an economic recovery.

I live in a tiny tourist town (population of ~600) upriver from NYC, our busy season is from July to October spurred on by the millions of city dwellers who take the train up to our tiny town to go to our numerous festivals, our vibrant downtown shops and hike our wondrous mountain trails. Hiking has returned (but feels significantly down from last year), shops are open but not many people are training up, and all festivals for the rest of the year have been canceled. I know a handful of shops have shuttered, a few that I know the owners of are on the verge of shuttering, as I'm sure most of them are.

I'm certain that once this pandemic is over, there will probably be some people who scoop up these shops for a steal, people will move back into the cities with rents depressed, and things will start recovering, but there will be a HUGE scar left that will keep consumer confidence down for a while. I'm worried that the millennials, having faced the second major economic blow in their short careers (mine included), are going to forever hold on to this trauma.

I'm near Kissimmee Florida (think Walt Disney World) right now. It's a ghost town compared to normal typical traffic and people present.

>there will probably be some people who scoop up these shops for a steal

Yes, the ultra rich. This pandemic has resulted in the greatest upward transfer of wealth in history.

That doesn't bode well for the global economy, does it? It also makes market caps like AMZNs a little bit sketchy, IMHO a lot of money is pulled out from more "risky" investments and pushed into, maybe, less risky ones.

The thing that kind of worries me is, as soon as people can't afford their mortgages anymore we might well have a new real estate crisis on our hands. The last one tanked the global economy all by itself, now the economy is already leaking left and right.

You listed personal consumption down as 34.6%, but also 34.6% annualized. Are some of those other numbers also supposed to be annualized?

yes, sorry almost all of those numbers are annualized as that's how I think about them and more importantly that's how our factor models use them.

It is very misleading though. When stocks drop 3% from yesterday to today, one doesn't go around writing "Stocks down 99.9% (annualised)"...

I agree, you'll have to take it up with the wall street journal though, I didn't write the article:)

> When you compare the last three years of Obama’s Presidency vs. Trump’s first three years, Trump’s deficits will be almost $1 trillion greater at $2.47 trillion to $1.51 trillion for Obama. It doesn’t look like Trump’s tax cuts will pay for themselves.

Just skimming [0], but I think the last president not preside over growth of the US debt was Calvin Coolidge in 1923. In recent years, Bill Clinton was quite unusual for not doubling the debt in his tenure.

It doesn't take away from your point, but Trump has to see a debt blowout of > ~$20 trillion for anyone who believes in data to bat an eye. The US government literally doesn't believe in fiscal prudence.

[0] https://www.thebalance.com/us-debt-by-president-by-dollar-an...

“Pumping up the economy” Was kind of pointless when nothing is open.

> “Pumping up the economy” Was kind of pointless when nothing is open

Based on these figures, over 90% of the economy was open.

"open" yes but severely hampered by government regulations and media fear.

> but severely hampered by government regulations and media fear

Activity is down 9.5%. That means over 90% of the economy is working fine. “Severely hampered” is in the 9.5%.

Most of the economy simply does not require people to be running around and congregating anymore. It’s automated or knowledge based. The 1950s view of our economy is part of the reason we’re seeing more damage than other countries.

There are billion dollar industries dependent of congregating.

Hospitality/Hotels Conventions Restaurant/Bars Movie Theaters, Opera, Musicals Museums

I could go on.

> There are billion dollar industries dependent of congregating

Again, they’re in that 9.5%. The economy is many trillions of dollars large.

Nobody is saying 9.5% is fine. But the 90% isn’t hampered or cowering in fear. It’s producing.

I did my part by holding on to the money. We took a vacation a few weeks ago and spent it that way. I think we're in the vast minority though. The stimulus really should have been held so the money could go to businesses as they reopened. As for the vacation, we drove to our destination (a resort in San Diego). We disinfected the room ourselves before moving in. We canceled daily cleaning. We avoided crowds and stayed masked up. People are critical of vacationing right now, and rightly so, but it can still be done in a safe way.

> When you compare the last three years of Obama’s Presidency vs. Trump’s first three years, Trump’s deficits will be almost $1 trillion greater at $2.47 trillion to $1.51 trillion for Obama. It doesn’t look like Trump’s tax cuts will pay for themselves.

To be clear: this is a fair comparison because it doesn't include the pandemic.

It's worth noting that this isn't unique to Trump. Deficits increased under Reagan and Bush, while deficits decreased under Clinton and Obama[1]. Republican austerity claims are thoroughly debunked bullshit at this point.

[1] https://www.politifact.com/factchecks/2019/jul/29/tweets/rep...

all budgets are passed by congress.. the best is when congress is opposed to the president. It would be interesting to look at that as a metric.

It doesn’t look like Trump’s tax cuts will pay for themselves.

Did anybody actually believe that?

> When you compare the last three years of Obama’s Presidency vs. Trump’s first three years

If you remove the pointless politicking, this is a very informative comment. Thanks for putting all that data together. It seems strange to lay out the completely unprecedented context, then proceed to ignore it in order to make a political claim though.

What politicking are you referring to?

What was the political claim?

Facts aren't political. They're just reality.

If you feel that facts reflect poorly upon your political position, that sounds like something you should address.

And to be clear: the statements you're quoting specifically exclude the pandemic, so I'm not sure what you feel is "the completely unprecedented context" here.

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