GeorgesGoons wrote: ↑Thu Jul 30, 2020 9:31 pm
ReignOnU wrote: ↑Thu Jul 30, 2020 9:23 pm
cougnix wrote: ↑Thu Jul 30, 2020 7:16 pm
GDP lost 32.9%. I was told I am not good at math so can someone tell me if that means the economy is soaring?
You weren't told you're not good at math, you proved it.
I'll go with a 99% chance that 1.) you have no idea why what you posted is factually wrong and 2.) you have no idea why.
While this isn't as absurd as your previous work, it's highly misleading. It looks incredibly bad to run it as a headline, so of course that's what we're going to see right now. There are tons of different reasons why that 32.9% shouldn't be thrown about, but the 1 reason why it should (make the president look bad) is why it's going to be out there.
I'll go with 100% why I have no clue why it's factually wrong, and I have no idea why
Without making your brain explode, I'll try to keep some of it simple, but some stuff can only be said 1 way...
"GDP lost 32.9%" would mean exactly what it says. We had X, we now have X-(X*32.9%). There's 2 problems here... #1 - GDP is stated as an annual metric. You don't get a quarterly contribution, it's more of an extrapolated run rate. #2 - The 32.9% is a quarterly variance, applied as a further run rate to the already annualized GDP and carried out for 3 more quarters.
The correct statement that the media "SHOULD" be running with is the "GDP lost an annualized 32.9%." While that's the typical terminology when referring to it, it's still misleading in most cases.
So here's some truth for you and you can make your own decision on what it really means:
- Q4 '19 GDP: $21.75 (trillions) (this means at the Q4 pace, we'd produce this annually)
- Q1 '20 GDP: $21.56 (this includes the month of March. We were trending up in Jan/Feb.)
- Q2 '20 GDP: $19.41 (Apr was devastating, May improved slight, then June up a little more)
- Final '16 GDP: $18.7
- From Q1 '20 to Q2 '20, which is what Coug's statement is saying "GDP lost 10.0%."
- So how do you get 32.9%? You have to take that 10% reduction out for 3 more quarters, to annualize. You'll notice that they aren't talking about a 2020 Final projection.
- What does that mean? Q2 '20's $19.4 goes to $17.5, then to $15.7, then to $14.2. Your $14.2 is then compared back to the previous quarter.
So now that you know HOW you get to 32.9%... let's think about a few things logically...
- From Q1 '20 to Q2 '20, we dropped ~$2.2 trillion.
- $1.1 of the $2.2 was services. (Duh, we shut down everything in Mar/Apr)
- $0.6 was private domestic investment... mostly construction. (of course)
- $0.2 came from Goods... Gas and other energy leading the way. (we had stay at home orders!)
All of this makes sense so far... no ask yourself this VERY important question... Do you REALLY think that we're going to see this kind of reduction again, taking another $2 trillion off the already down Q2 number? Do you REALLY think we'd do it again in Q4? Can you even remotely fathom that we'd do it 1 more time at the start of 2020? I'm not asking if you think we'd be level from Q2 '20 to Q3 '20... I'm asking if you think we'll rip another $2 trillion from that poor Q2. That's what your 32.9% is telling us is going to happen.
