Let's discuss GDP numbers. First, there's the tricky thing about percentage changes is that percentage changes on the way down are always smaller than on the way up because on the way up you have a smaller base. [1/x]

(For those who need the math. I had two cookies and my kid took one so my cookies shrunk by 50%. He gave me half back so my cookies increased by 50%. I still had 25% fewer cookies.) [2/x]

Second, annualized rates make sense when we are on a trend that is more or less likely to continue. When we are growing at an annualized rate of 2% it means that if things continue as they are going then GDP will be 2% bigger a year later.

GDP from Q2 to Q3 grew by 7.4%. If it keeps growing at that rate for three more quarters than GDP will be 33.1% higher. But we all know that it won't. It can't. So that number is useless.

Three, there are two sensible ways to assess our current GDP. (1) If you want an annualized growth rate, how much did we grow between Q3 2019 and Q3 2020. That number is a disappointing -2.9% Our economy was 2.9% smaller than our economy was in Q3 of 2019.

Another sensible approach is to ask how much smaller GDP is relative to the pre-pandemic period--GDP is about 3.5% smaller than Q4 2019,

Okay, now that's out of the way. What else did we learn?
GDP growth was REDUCED by decreases in government spending. The state and local emergency need for funds is real.