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THREAD. For the economy to be in the same place it was in this time last year, tomorrow's GDP number will have to show that GDP grew at a 50 percent annual rate in the third quarter. The most we are likely to see is in the high 30s.
2/ A third quarter growth rate in the high 30s is good! It represents a significantly faster pace of recovery than many economists thought possible.
3/ A big part of the reason why the economy recovered so quickly in May, June, and over the rest of the summer was the Cares Act, the $1.8 trillion spending law passed by Congress and signed by President Trump in late March.
4/ Leaders in Congress from both parties and the Trump administration deserve credit for the Cares Act. It made a huge difference.
5/ But even given the enormous fiscal policy support in the Cares Act, the economy is in bad shape.
If the economy grows at a 30 percent annual rate in the third quarter, GDP will still be 3.5 percent lower than in the third quarter of 2019.
If the economy grows at a 30 percent annual rate in the third quarter, GDP will still be 3.5 percent lower than in the third quarter of 2019.
6/ 40 percent annual rate in Q3 -> GDP will still be 1.7 percent lower than in 2019 Q3.
45 percent annual rate -> GDP will still be 0.8 percent lower than this time last year.
45 percent annual rate -> GDP will still be 0.8 percent lower than this time last year.
7/ For context, consider the Great Recession. Measured by comparing the current quarter to the same quarter in the previous year, the worst quarter in the Great Recession saw GDP decline by 3.9 percent.
Fin/ So even a third quarter GDP number in the high 30s represents a massive loss of income for workers and businesses.
Congress and the President need to pass another economic recovery package.
Congress and the President need to pass another economic recovery package.
