We have had dramatic headlines and commentary in recent days since the BEA issued its initial estimate of quarterly changes in GDP, which they do not officially measure on an shorter time period. This is a measure of the average GDP in one quarter compared to the average GDP in the next quarter. Looking at Q1 of this year and Q2 of this year, they reported the largest quarterly decline ever recorded, -32.9% on an annualized rate, about -9.5% on a quarterly rate. This is a sharper decline than seen either for any pair of quarters in the Great Depression or the immediate post-WW II demobilization, much less such later events as the Great Recession of 2007-09. Of course this generated big headlines and much breathless commentary, including quite a few commentators who did not get it that the -32.9% number was the annualized rate rather than the quarterly rate, so we had quite a few of them foolishly talking about how the economy had “fallen by a third.” Yikes.
As I have noted in previous posts here, the economy has been doing a lot better than a lot of reporting and forecasts have let on, even as it is certainly slowing down now. But if rather than looking at quarterly averages, which are heavily influenced by the fact that the economy did not “fall off a cliff” until mid-March, about 5/6 of the way through Q1 so that most of Q1 was at the high pre-fall level, one looks at where the economy was at the end of Q1 and compare it to where it was at the end of Q2, one gets a dramatically different story. Over on Econbrowser Menzie Chinn has produced a figure from IHS Markit that estimates these shorter period changes. According to them the US GDP at the end of March (end of Q1) was at about $17.6 trillion annual amount while at the end of June it was at about $18.0 trillion, about 2.2% higher on a quarterly rate, which is about 9% higher on an annualized rate. Needless to say, there is a dramatic contrast between -32.9% and +9.0%, but I have seen zero media commentary on this.