Global pandemics typically aren't good for national economies. On the contrary, they are usually bad. The U.S. economy, for example, contracted 9.5 percent in the second quarter of 2020—the largest quarterly decline in recorded history. The German economy, meanwhile, declined by 10.1 percent.
Not surprisingly, the U.S. economic decline in the second quarter (start of April through the end of June) looks a lot bigger from an annual perspective—in other words, how much the economy would shrink if the 9.5 percent quarterly decline persisted for the rest of the year.
Under that hypothetical (and entirely unrealistic) scenario, the U.S. economy would contract by 32.9 percent. It's a scary number, but it's also meaningless. In the words of liberal economist Justin Wolfers: "No one thinks that will happen. Ignore it."
Guess which number CNN and other media outlets, renowned for their economic literacy and scrupulous aversion to context-free hysteria, chose to use in their reporting on the economic data. Hint: It's the same number that Democratic politicians, in their quest to restore common sense and science-based accountability to Washington, cited in their denunciations of President Trump.
The US economy contracted by 32.9% from April through June, its worst drop on record https://t.co/5GXdUqNGNs
— CNN Breaking News (@cnnbrk) July 30, 2020
United States GDP fell by a record 32.9% in the second quarter of 2020. https://t.co/sqnGpF6Lkp
— Sahil Kapur (@sahilkapur) July 30, 2020
Worst ever single quarter contraction of US economy.
In context: pic.twitter.com/ZPuA58vdr6
— ian bremmer (@ianbremmer) July 30, 2020
First, hell no. Second, you can't. Third, my state has proven year after year that vote-by-mail is safe and secure. And fourth, this outburst doesn't have anything to do with your total lack of leadership causing a 33% decline in our economy, does it?
We will vote on November 3. https://t.co/L4aICjVOqW
— Rep. Pramila Jayapal (@RepJayapal) July 30, 2020
Seeing ppl point out that the Q2 32.9% GDP drop is the *annualized* rate & actual Q2 drop is 9.5%
Outside my wheelhouse, but anyway, the new Biden statement on the economy says that the "worst period for economic growth" over the last 3 months was "a drop of nearly 33 percent" pic.twitter.com/GK4saoXLUd
— Emily Brooks (@emilyelarsen) July 30, 2020
As always, our nation's journalists weren't afraid to ask the tough questions.
Did the Q2 GDP fall 10 percent or 32 percent? I'm seeing reliable folks give both numbers and I can't tell why they're different.
— Matt Ford (@fordm) July 30, 2020
Not to worry, though. We can be confident that these fearless journos will rediscover their passion for context and sober analysis just in time for the late-October release of third quarter economic data, which many analysts expect will show significant growth. Goldman Sachs, for example, projects that the U.S. economy will expand at an annualized rate of 25 percent over the next several months.
If you're upset at the media for not being more clear about annualized data, don't worry, I'm sure they'll do a better job in Q3.
— Joe Weisenthal (@TheStalwart) July 30, 2020