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Chart of the Day: GDP Is Soaring Already

Using the normal way of accounting, real GDP was up 6.4% in the first quarter of the year:

Here's another way of looking at it:

We're still about half a trillion dollars shy of where we'd be if there had been no pandemic and GDP had followed its previous growth path. With any luck, however, we should be able to make that up by the end of the year.

44 thoughts on “Chart of the Day: GDP Is Soaring Already

  1. Mitchell Young

    LOL. Real GDP 'soared' over 15% in Q3 of 2020 and another 4.3% in Q4, even with the recalcitrance of 'blue' governors to open their states and Fauci-CDC obstructionism.

    OTOH,

    "The price index for gross domestic purchases increased 3.8 percent in the first quarter, compared with 1.7 percent in the fourth quarter (table 4). The PCE price index increased 3.5 percent, compared with an increase of 1.5 percent. Excluding food and energy prices [i.e. the stuff people need], the PCE price index increased 2.3 percent, compared with an increase of 1.3 percent."

    Given that Stumbling Joe is a relic from the Carter era, I would put even money on a return to 7-8 percent inflation. But the Fed will keep interest rates low and savers will suffer.

    1. sonofthereturnofaptidude

      You definitely want to get the Fed on the line and tell them about all this anticipated inflation. I'd like to listen in on the call, just to hear them laughing at such nonsense.

      "Stumbling Joe" forsooth. He's playing the Congress like a violin.

      1. Mitchell Young

        That's 3.5% on things that people need, you know, energy, and food. But hey, you can get the latest Android phone a five percent decrease and netflix just cut their prices. And of course rents are up too.

    2. RZM

      I hope you haven't been putting even money on 7-8 percentage inflation for the past decade when all of your fellow Kudlovians were guaranteeing a return to the 70's after the Obama stimulus. You'd be dead broke by now. BTW by Carter era I assume you are including Nixon and Ford. Remember when WIN ("Whip Inflation Now" ) was king ?

      1. dilbert dogbert

        NO!!! Not Whip Inflation Now!! It was Wilbur Is Naughty!!!! Remember when Wilbur and Fanny Foxy went swimming in the Tidal Lagoon???

      2. Mitchell Young

        Ever hear of the real estate market...the typical hedge against inflation? Yeah, people who've invested in Real Estate have done horribly in the last decade.

    3. George Salt

      It's amazing what you can accomplish when you replace a lazy, incompetent, washed-up reality TV star with an experienced leader.

      1. MontyTheClipArtMongoose

        Based on the GQP's intentions in the California Gubernatorial Recall, they are hoping we soon forget this lesson.

        1. akapneogy

          What lesson? The only lesson is 'tax cuts above all else' even if that means embracing racism, misogyny and religiosity.

          1. MontyTheClipArtMongoose

            Shallow, novice celebrity candidate to take down a qualified political pro.

            Jenner v. Newsom is the new Trump v. Shrillary.

    4. KenSchulz

      That would be the President Carter who averaged better real GDP growth than Nixon, Ford, both Bushes and Trump, and within a quarter-percentage point of Reagan?

      1. Mitchell Young

        You mean the motivation for the 'Misery Index' and "Malaise' and 'America Held Hostage'...I was fairly young but I remember it sucking.

  2. bbleh

    AIYEEE! The Inflation Monster is coming to EEET US IN OUR BEDZ!

    Don't listen to that ol' fuddy-duddy "Fed Chairman," or to any of the vast majority of other "economists" who "study" this sort of thing, not to mention the "bond markets!" Just because they're all putting reputation and money on the line doesn't mean they have any idea what they're talking about. Because INFLATION MONSTER AIYEEEE!

    Talk about a "relic from the Carter era." Jeezus ...

    1. Mitchell Young

      You know, even the Census bureau had to create a supplemental poverty measure because they realized the Federal Reserve and BLS measures of prices and the way people (need to) spend money was so FUBAR.

      1. ScentOfViolets

        How does anything you say here address his point? Be specific; I've noticed that you tend to resort to reasoning that would not sound strange coming from the mouth of an underpants gnome 😉

        1. Mitchell Young

          What point would that be? The Fed 'experts' say that inflation is 'under control'? Well, I showed that even within government (or quasi-government), the 'experts' in one agency recognized that the other guys' measures were misaligned with reality.

          1. bbleh

            Irrelevant (and in this case ignorant) whataboutism. All the Supplemental Measure does is add in the value of government benefits that are not included in the overall poverty measure that ... think about this one, I know it's hard, but try ... is a major factor in determining eligibility for those benefits in the first place. That is, it's a measure for ascertaining whether people live in poverty after all is said and done, rather than whether they would do so without assistance. It's not a measure of prices or inflation.

          2. Mitchell Young

            You clearly don't understand the supplemental measure. Yes it adds in government benefits, but it also takes into account real spending percentages, not those of the 1960s. In California, for example, very few poorer people pay less than 50% of their monthly income in rent.

  3. skeptonomist

    Saying that GDP is "soaring" is stupid. The true picture is in the second graph - we are still creeping back to trend GDP growth, which was actually not that good historically. In the second quarter of 2020, GDP rose at an annualized rate of 30%, but obviously projecting that into the future would be nonsense - nobody talks about a "Trump boom" - and projecting last quarter's growth makes no sense either. Hopefully the American Families Plan - $1.8 trillion stimulus - combined with opening up will boost GDP but we really haven't seen the effects of that yet. But after that stimulus, which may last for a year or so, there is no sign that there will be any more stimulus (unless Manchin and Sinema change their minds) and there is no change in fundamental economic conditions. In fact inequality has increased.

    By the way huge expenditures by the Japanese government after their 1991 slump, leading to debt/GDP of over 230%, certainly did not lead to a boom or "overheating". Economists don't know nearly as much as they think they do about the effects of either monetary or fiscal action. The economic future is actually very uncertain, but there is definitely a mood of irrational exuberance, which seems to have affected Kevin as well as many others.

    1. sonofthereturnofaptidude

      See? I actually read your whole post because you didn't call anyone stupid!

      BTW, I believe the phrase "irrational exuberance," at least in the Keynesian meaning, refers to market investors, not government investments in infrastructure.

      Also, comparing the US in 2021 to Japan thirty years earlier? I don't see it. A small, non-super-power archipelago off the coast of China, almost a protectorate of the US, at a time when fossil fuels ruled the day doesn't seem like a good comparison to a global superpower whose currency dominates world markets and is shifting away from fossil fuels in the 2020s. I think that China over the last decade or so would be a more apt comparison.

      1. George Salt

        For a "small, non-super-power archipelago off the coast of China" they sure scared the bejeezus out of a lot of Americans back in the '80s. It was a dry run for our current bout of yellow peril.

        1. Mitchell Young

          They still own a lot of US assents. Example Sony Entertainment owns Columbia Pictures (problematic name) and Screen Gems. They could cut off access to Green Acres reruns at the drop of a hat.

          1. Mitchell Young

            Actually we on the alt right were quite pleased...it was a well deserved win for our Nipponese comrades.

      2. skeptonomist

        I am not criticizing government investment, rather the peculiar attitude of a lot of people not just in predicting a boom but in claiming to see evidence of it in the latest news. The stock market continued its irrational exuberance after a short crash, actually before any fiscal stimulus was passed. We can hope that the stimulus will have a major effect, but it hasn't happened yet. There is danger that if the predictions fall short there will be a major loss of confidence, possible puncture of bubbles and another recession.

        Yes, China is a good example of how government direction of major investment can be successful, a counter to the example of Japan. But I would say that as a relatively little-developed economy (30 years ago) it is not a better parallel to the US than Japan, which is also a mature economy. Actually the current situation is unique and there are too many uncertainties to justify the degree of confidence that seems to be shown in markets and the media.

        1. Mitchell Young

          The 'collapse of Japan' narrative is, basically, a fairytale. At least economically. They do have demographic problems, but falling real estate prices actually help in that regard.

        2. aldoushickman

          "Yes, China is a good example of how government direction of major investment can be successful, a counter to the example of Japan."

          This is . . . a very *unique* take on the question.

  4. George Salt

    There's an interesting chart on the NYT front page. which compares the current recession with the last five recessions. This one is looking like a classic "V-shaped" recession and recovery, which we haven't seen in a while.

    Thanks, Joe!

    1. golack

      And Democrats in general. When the Trump admin was going to throw money at the problem to make Trump look good, the /Democrats actually worked with that administration to create useful bills--even over the objections of Republicans. The worked for the good of the country even though it might hurt their electoral chances.

      Now Biden is in office, the Republicans are, in general, mainly trolling--no good faith negotiations. There are the occasional exception--maybe--we'll see how things play out.

      Note, recovery not yet "V" shaped for everyone--but looks like we may get there.

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