Media

CNN, Others Delight in Hysterical Ignorance Over GDP Shrinkage

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.

As always, our nation's journalists weren't afraid to ask the tough questions.

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.