U.S. real GDP declined at an annualized rate of 32.9% in the second quarter.
As pretty much everyone knows, that is by far the worst performance for any quarter going back the 70+ years to when we think we can first estimate this data.
I’ve been very reticent about commenting on the macroeconomy over the last 5 months, because, as a macroeconomist, my considered opinion is that none of us knows wtf we’re talking about. This is unprecedented.
In fact, I’d hesitate to call this a recession or depression. Here’s why.
A recession (or depression) is a period in which economic events cause broader cultural, political, and societal problems. But with a pandemic, it’s the other way around: broader cultural, political, and societal events are causing economic problems.
In my Principles classes, I stress that part of the problem in studying business cycles is that every one is different from the ones before. I hope 2020 proves my point to you.
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