U.S. Is About to Unveil the Ugliest GDP Report Ever Recorded
Today on the show GDP GDP stands for gross domestic product and it's basically a sum total of all of the goods and services that the US economy produces. It's often considered to be the measure of economic growth. Yep. GDP includes all the cars, an air conditioners in shoes and haircuts Uber Rides, and fish tacos and pedicures that the country is producing and buying. And so atypical GDP growth number is like two percent a year or maybe a really great year three percent. It's like soccer scores they never it never gets very. Stay pretty low and that's because the US economy is enormous. So even when a lot of things change the GDP needle doesn't budge very much at least it didn't used to. That's right. The GDP numbers came out today and for the months of April May and June that's the second quarter. The US economy grew at an annualized rate of negative thirty two point nine percent that is today's indicator negative thirty, two, point nine percent and I have to see if I saw this number I was like our economy shrank by thirty three percents I mean that is a third of our entire economy, right? I mean that can only happen a few times. It was really scary. So I called up Justin Wolfer as he is a professor of economics and public policy at the University of Michigan. And I was like wait a minute is the US economy like one third smaller? Did we just lose a third of the economy and so did we lose their economy? In. Okay. Okay. It turns out the way that Americans report the GDP. is a little more confusing than you might realize. What actually happened is in the second quarter, we produced nine and a half percent less than we did in the first quarter. You might think we should report that as a decline in GDP of nine and a half percent. Yes. What we do instead is we say if we continued to plummet at that right for an entire year. At the end of the year, how much lower would GDP? That's what thirty two point nine percents. it says if the economy kept declining at a right of nine and a half sin quarter after quarter after quarter after quarter four quarters later, a level of output would be good. Two point nine percent lists now that's unrealistic. This was the worst quarter. Probably. In American history. So. Yeah. Let's say you do not try to extrapolate for the whole year. Then what you're looking at is that in April May and June the economy shrank by about nine and a half percent from the first three months of the year, which is way better than an economy that shrink at thirty, two point nine percent. But. That number still makes April May and June. The worst three months in the history of the US economy.