Slow-Healing Scars: The Pandemic’s Legacy

By Sonali Das and Philippe Wingender Recessions wreak havoc and the damage is often long-lived. Businesses shut down, investment spending is cut, and people out of work can lose skills and motivation as the months stretch on. But the recession brought on by the COVID-19 pandemic is no ordinary recession. Compared to previous global crises, […]

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Working Out the Differences: Labor Policies for a Fairer Recovery

By John Bluedorn The COVID-19 pandemic’s destruction of jobs was sure and swift. The lasting effects of the crisis on workers could be just as painful and unequal. Youth and lower-skilled workers took some of the hardest hits on average. Women, especially in emerging market and developing economies, also suffered. Many of these workers face […]

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Business Cycle Indicators as of 26 February: Consumption Rebound

The goods production side of the economy continues to recover, consumption jumps, while other indicators faltered. Some key indicators followed by the NBER Business Cycle Dating Committee. Figure 1: Nonfarm payroll employment (dark blue), Bloomberg consensus as of 2/26 for February nonfarm payroll employment (light blue square), industrial production (red),  personal income excluding transfers in […]

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The American Rescue Plan Assessed

I talked through some issues regarding the competing recovery plans in this Wisconsin Public Radio interview. Here are some graphs to buttress my point that the Senate Republican plan is underpowered. First, where is the economy? Facing a big output gap, even after all that previous fiscal stimulus. Figure 1: GDP (black), CBO projection (red), and […]

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The COVID/Lockdown Recession Is Over

And the recovery is well under way.

Real gross domestic product (GDP) increased at an annual rate of 33.1 percent in the third quarter of 2020 (table 1), according to the “advance” estimate released by the Bureau of Economic Analysis. In the second quarter, real GDP decreased 31.4 percent.

This is from a news release from the U.S. Department of Commerce’s Bureau of Economic Analysis, October 29, 2020.

A 33.1 percent annual rate of increase means that that would be the rate if the rate of increase of the summer quarter continued for 3 more quarters. Of course, that won’t happen. To put it in perspective, a 33.1 percent annual increase implies that real GDP in the summer quarter increased by 7.4 percent. That’s a record increase for a quarter.

Of course it comes after the huge decline of 31.4 percent (annual) in the spring quarter, which happened due to Covid-19 and the lockdowns.

That doesn’t make it even. If a number falls by 31.4 percent, then to get back to where we where, we need an increase of 45.8 percent.

To help with the math on the second point a little, here’s how I put it after a tutorial during which I watched myself on video in prepping for my first distance-learning class way back in 2002: “The camera loses 1/4 of my energy; therefore I need to increase my energy by 1/3.”


Here’s the math on both if you’re interested and, for that matter, even if you aren’t interested.

Let x be the quarterly rate of growth.

Then (1+x)^4 = 1.331.

4 ln(1+x) = ln(1.331) = 0.2859

ln(1+x) – 0.2859/4 = 0.07148

1+x = e(0.07148) = 1.074

Therefore x = 0.074. Growth rate = 7.4 percent.


On the second one.

If a number falls by 31.4 percent, it falls to 68.6 percent of what it was.

To get from 68.6 percent to 100 percent, it must rise by 1/0.686 = 45.8 percent.



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Wall Street vs. Academics on Q3, Q4

Given apparent gridlock in Washington – that is the gap between the administration and Senate Republicans on phase 4 recovery package – Wall Street economists and academics see the recovery somewhat differently. From the Initiative on Global Markets/FiveThirtyEight Covid panel round 10 survey (released October 12). Figure 1: GDP actual (black bold), WSJ October survey […]

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Business Cycle Indicators as of 1 October

Deceleration continues, according to some key indicators noted by the NBER’s Business Cycle Dating Committee (BCDC). Figure 1: Nonfarm payroll employment (dark blue), Bloomberg consensus for September as of 10/1 (light blue square), industrial production (red), personal income excluding transfers in Ch.2012$ (green), manufacturing and trade sales in Ch.2012$ (black), and monthly GDP in Ch.2012$ […]

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