American Second Quarter 2020 GDP Drop Is One for the History Books
It’s nearly August 2020. U.S. weekly jobless claims rise for a second straight week, to a total of 1.434 million. It was the 19th straight week in which initial claims totaled at least 1 million and the second consecutive week in which initial claims rose.
Just the facts? The U.S. economy suffered its worst period ever in the second quarter, with GDP falling a historic 32.9%. 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 July 30th, 2020.
The Great Shutdown Failed
So what happens when, due to a great shutdown, your economy dips one third? It was the deepest decline since the government began keeping records in 1947 and three times more severe than the prior record of 10% set in 1958. The rich get richer and women everywhere get poorer with a WFH movement that’s likely to put working women back a generation.
The American GDP drop signals the worst single case drop ever, with the closest previously coming in mid-1921.
This as Covid-19 spreads more rapidly than ever before in the United States as a whole.
Continuing claims — which are composed of those receiving unemployment benefits for at least two straight weeks — rose by 867,000 to 17.018 million for the week ending July 18. Data on continuing claims is delayed by one week. Sectors such as small business, restaurant, hospitality, hotels, travel, retail, gambling, movie, leisure and entertainment are largely the most severely impacted.
The Consumer Economy is Crippled
Sharp contractions in personal consumption, exports, inventories, investment and spending by state and local governments converged to bring down GDP in America, which is a consumer based economy. Consumer sentiment as you can expect is not great 5 months into the pandemic. The US has lost nearly 15 million jobs since February, despite strong hiring in May and June.
American civil unrest has increased to historic proportions, as well as a defund the police movement. If you think about the economy another way, personal consumption historically has accounted for about two-thirds of all activity in the U.S. It subtracted 25% from the Q2 total, with services accounting for nearly all that drop.
Of course we are living a great event of the 21st century. Neither the Great Depression nor the Great Recession nor any of the more than three dozen economic slumps over the past two centuries have ever caused such a sharp drain over so short a period of time. 1,500 people a day are dying from the pandemic in the United States.
You don’t hear much about the coronavirus in the news anymore as it relates to the world at large. It’s on the rise elsewhere. In Japan, for instance, they are about to face their first wave.
For the U.S. economy, reduced spending on services such as healthcare , ironically, are a big part of the fall. A recession is commonly defined as two consecutive quarters of declining gross domestic product — the supposedly broadest measure of the economy. As if unemployment rates were an accurate and realistic indicator of the digital and WFH economy in 2020?
Female Workers Won’t Have Equality Opportunity in the WFM Movement
The Great Shutdown has changed the trends of women in business, scaring away a sizable number of the few female entrepreneurs. Women doing more chores in a world of WFH is basically a way to push convenience for men up and create more barriers for professional women to succeed. America the brave, where women carry the majority of the burden when things go well and also when things go poorly.
Still a 33% drop is impressive compared to other recessions. By comparison, the worst quarter during the financial crisis of 2008 was the 8.4% GDP drop in the fourth quarter of that year. The previous low-water mark was a 10% slide in the first quarter of 1958, while the worst in recorded history came in Q2 of 1921. Still I’m surprised that gender equality isn’t being talked about in a world of black lives matter and protests.
Civil Discord and Unrest at an All-Time High in the U.S.
The U.S. appears to be entirely manipulated by weaponized algorithms on social media in 2020. Workers across the country were told to stay home from any job not considered essential, resulting in a crushing halt that saw the unemployment rate peak at 14.7%, a post-Depression high.
Now as the pandemic gets serious, there’s no talk about another Great Shutdown, since everyone fears the uncertainty and economic hardship it would cause.
Due to the failure of the health crisis however the first Great Shutdown in the U.S. was totally insufficient and likely ineffective and wasted. Thousands of businesses went under. A country stood paralyzed and skeptical against an invisible enemy. Trillions of dollars as the price for that kind of freedom.
The National Bureau of Economic Research said the current recession actually started in February, a month before the pandemic declaration. First-quarter GDP fell 5%. Many single Mothers, among the most vulnerable groups, will likely become homeless in 2020 or 2021 in the United States. Millions more than usual will die of starvation globally, mostly children in undeveloped countries.
United States, India, Brazil and Mexico Hardest Hit From First Wave in 2020
It’s not just the United States. Brazil, India and Mexico, among others, appear totally unable to cope with the coronavirus. Still the hit to the U.S. is so great it could cause China to eventually win the currency wars where the U.S. dollar is no longer the world’s reserve currency.
China has a lot to gain from the economic pain of the United States. Given China’s lack of data transparency about the virus, it appears to have been strategic.
The U.S. economy’s collapse is problematic for its future of work. The collapse was unprecedented in its speed and breathtaking in its severity. It was the biggest drop in jobs since record-keeping began more than 80 years ago. The impact on black and Latin-x populations has been much worse than for whites.
The impact on women has been much more severe than for men. Many schools will have digital only or a hybrid learning model in late 2020 and 2021, putting an extraordinary burden on working women in America.
The U.S. Economy and the Price of Liberty
Unlike past recessions, this one was a result of a conscious decision to suspend economic activity to slow the spread of the virus. Congress pumped trillions of dollars into the economy to sustain households and businesses, limit long-term damage and allow for a rapid rebound.
However America wasted its liberty and let the coronavirus back into their homes. States reopened too quickly, federal action was limited and disjointed. Health leadership failed society, The 1st wave is just beginning, months after the Great Shutdown of March 2020. When they talk about new normals and the world not being the same, they are right.
With a W-shaped recovery likely, we are about to drop from the top of the first V. It’s a difficult time we are entering in August 2020. Everyone wants to keep putting on rose-colored glasses. But it’s not just the President who failed America in 2020.
It’s a mirror of the inequalities in our system of capitalism that doesn’t protect women and minorities or correct wealth gaps and technology companies who are pervasive antitrust abusers in a free market economy.
Most of the world has seen an average of a 10% decline in GPD. In America it’s triple that. The International Monetary Fund has predicted that global growth will fall by 4.9% this year.