UK records deepest recession among top economies

[sandensea]

Last edited Wed Aug 12, 2020, 09:42 PM - Edit history (1)

Britain has suffered the deepest recession among the world’s top economies this year, shrinking by a fifth in the second quarter alone when much of the economy was mothballed as part of efforts to contain the coronavirus pandemic.

The 20.4% Second Quarter drop is the worst since quarterly records began in 1955, the Office for National Statistics said - and means Britain is in recession for the first time since 2009.

Britain’s recession is deeper than those recorded by comparable economies in Europe - notably Germany (-10.1%), France (-13.8%), Italy (-12.4%), or the United States (-9.5%).

Canada and Japan, the remaining members of the G-7 leading industrial nations, have yet to publish their second-quarter numbers but no economist thinks they will be as bad as the U.K.’s.

At: https://abcnews.go.com/International/wireStory/uk-economy-officially-recession-204-q2-slump-72321579

British Prime Minister Boris Johnson addresses workers at MTX, a leading British construction firm, recently.

Johnson's Britain, which leads Europe in Covid-19 deaths at nearly 47,000, also leads major economies as far as the severity of its 2nd Quarter downturn.

[progree]

1. It's 2nd quarter, not 1st quarter.

The first 2 paragraphs as I just swiped them from the article reads:

LONDON -- Britain has suffered the deepest recession among the world’s top economies this year, shrinking by a fifth in the second quarter alone when much of the economy was mothballed as part of efforts to contain the coronavirus pandemic.

The 20.4% quarterly drop is the worst since records began in 1955, the Office for National Statistics said, and means Britain is in recession.

Maybe they fixed it.

As a side note, I know some people are going to object to the 9.5% figure for the U.S.  

Britain’s recession is deeper than those recorded by comparable economies in Europe - notably Germany (-10.1%), France (-13.8%), Italy (-12.4%), or the United States (-9.5%).

Isn't it 32.9% for the U.S.? The 32.9% is an annualized rate for the 2nd quarter.

The Bureau of Economic Analysis (bea.gov) produces the U.S.'s GDP report.

Here is from the bea.gov's news release, https://www.bea.gov/data/gdp/gross-domestic-product

Real gross domestic product (GDP) decreased at an annual rate of 32.9 percent in the second quarter of 2020, according to the “advance” estimate released by the Bureau of Economic Analysis.

This translates to an actual drop of 9.5%.

(1-0.329)^(1/4) = 0.905  ,   1 - 0.905 = 0.095 = 9.5%

From the New York Times:

(from one of their "live" columns - https://www.nytimes.com/live/2020/07/30/business/stock-market-today-coronavirus)

We ploughed this furrow endlessly at https://www.democraticunderground.com/10142549435 -- the OP, #1, graphs: #22, #24

You will also find graphs showing a 32.9% drop, but at the bottom it will say "seasonally adjusted at annual rates"

[sandensea]

2. Noted - but in Europe they measure GDP quarterly, not quarterly-at-an-annualized basis

- as we do here.

I remember reading a good article on the Economist some years ago as to why, exactly, this decision was taken (in the U.S.):

Basically to make growth look stronger - i.e. for PR reasons.

It's no less accurate. But "2% growth" looks better than 0.5% growth - which it is on a quarterly basis.

[progree]

3. You're exactly right on all of the above /nt

[sandensea]

4. Likewise!

And thanks for that great chart - a keeper for anyone who likes to keep up with these things, and wants a good, accurate visual aid.

It would stump Cheeto - but for you and me, it's perfect.

[progree]

5. I suspect the people who made the U.S. reporting decision never anticipated the Cheetolini economy

where reporting quarterly changes on an annualized basis --

which looks good when you turn a 0.5% quarterly gain into a 2.0% annualized gain for the quarter

blows up in the face in the Cheetolini economy, when, for a quarter, a 9.5% actual drop turns into a 32.9% annualized drop!

Picture Wiley E. Coyote dropping off the cliff:

M a g a a a a a a a a    a    a    a        a        a            a               a                                      a

[sandensea]

6. You know, when he took office I thought this might happen by way of a Bush-style crash

Another massive, multi-trillion dollar derivatives heist - or some other systemic financial crisis.

Little did I imagine it would come by way of that most ancient of human adversaries: a virus.

I'd say there's a 50% chance Cheetolini was behind this.

"China won't give my Tootsie her $2 billion? Release the bug!"

"But, sir. If you do that, nothing can stop it from spreading worldwide - including the U.S.!"

"Shut the fuck up, general. Do it!"

[progree]

7. "Another massive, multi-trillion dollar derivatives heist - or some other systemic financial crisis"

I'm afraid that still can happen. I think I've been occasionally reading a posting or two here now and then about, I think it's collateralized mortgage securities for bundled commercial mortgages this time that people are worried about blowing up...

On top of the virus.

Yes, I'm surprised too that we're being felled by a plague like it was ancient Rome or medieval times. I thought our medical capabilities were better than that, though I know about MRSA and stuff that we basically don't know how to deal with.

[sandensea]

8. +1

Thank goodness for the Fed.

And for the world's enduring faith in the dollar.