2qtr. Real GDP fell only 8% from 1qtr. GDP = not bad !

SUMMARY:

With 20% of the

labor force collecting

unemployment checks, 

an 8% decline 

of the production

of goods and services

in second quarter 2020,

vs. first quarter 2020,

is surprisingly small.

You heard -32%.

Every other country

would have reported

a -8% decline.

DETAILS:

Of course there 

will be revisions, 

and who knows

how far off the 

seasonal 

adjustments 

were ?

June data are also

very preliminary.

Revisions could

be large -- two points

in either direction 

are possible !

In addition, one 

percentage point

of the 8 point decline

was from a private

inventory reduction,

which is counted

as bad news, 

but really is not.

So, "real final sales"

fell about 7%, and 

inventories declined

1% = an 8% real GDP 

decline quarter 

to quarter.

If continuing for four

consecutive quarters,

-8%  x  4  =  -32% annual rate

Of course we are in a

government mandated

COVID-19 partial lockdown 

recession.

Was there any doubt ? 

We didn't need 

two Real GDP 

down quarters 

in a row to know 

that !

In two earlier articles 

here, I explained

the real unemployment 

rate was about 20%,

not the 11% reported 

in the June 2020

employment report,

that overlooks the

"gig workers" 

who are receiving

unemployment

checks for the 

first time.

32 million were 

collecting 

unemployment

checks in mid-June,

out of a 160 million

labor force.

That's 20%.

Some other people 

are unemployed

that may have been

working "off the books"

before the pandemic.