NYT Claims 5 years of growth wiped out - Forecasters beg to differ.
A New York Times headline describes a second-quarter lockdown statistic as "A Collapse That Wiped Out 5 Years of Growth, With No Bounce in Sight" That means the author, Ben Casselman, has gone on record predicting real GDP in the third and fourth quarters will be no higher than in the second. He somehow neglected to cite a single economist to confirm this no-growth forecast, but that omission is easily remedied.
The Blue Chip Forecasters predict the economy will grow at a 17.7% pace in the third quarter. Over 60 Wall Street Journal forecasters likewise predict a 15.2% bounce in sight.
Mr. Cassleman prefers to rest his "no bounce" argument on historical hyperbole:
"The economic collapse in the second quarter was unrivaled in its speed and breathtaking in its severity. . . . The only possible comparisons in modern American history came during the Great Depression and the demobilization after World War II, both of which predated modern economic statistics."
Actually, the author's own graph shows no significant recession after World War II ended. And thoroughly modern federal statistics do exist to show that real GDP fell by 12.9% in 1932 - for a whole year, not a single quarter. Cassleman confounds such an annual change with an "annualized" but ephemeral three-month change (that annualized 32.9% drop being 9.5% per quarter multiplied times four quarters, albeit with adjustments).
Many states deliberately shut own vast sections of their economy during the second quarter. Workers were not allowed to work, producers not allowed to produce, musicians not allowed to make music. A larger share of productive activity has since ceased being treated as criminal activity, but quite a lot still is.
When the dust from all this political wreckage settles, the economy for 2020 as a whole may well end the year 6-7% smaller than last year. Yet that would certainly not wipe out five years of growth. And, as economic forecasters clearly know, there is plenty of "bounce in sight" from now on if federal and state governments will simply get out of the way and let it happen.