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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A Race Between Vaccines and the Virus as Recoveries Diverge

By Gita Gopinath In just three months since we released our last forecast in October, recorded COVID-19 deaths have doubled to over 2 million, as new waves have lifted infections past previous peaks in many countries. In these same three months, multiple vaccines have seen unexpectedly strong success and some countries have started ambitious vaccination […]

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Top 10 Blogs of 2020

By IMFBlog Welcome to 2021. Before we step too far into the new year, the editors at IMFBlog invite you to reflect on what the world went through in 2020. As much as we would like to turn the page on 2020, navigating a course forward through still uncertain times entails using all we’ve learned […]

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How Governments Can Create a Green, Job-rich Global Recovery

By Kristalina Georgieva and Rajiv J. Shah Climate change and the COVID-19 crisis have a great deal in common. Both are human tragedies and economic catastrophes: The pandemic has taken more than a million lives, thrown hundreds of millions out of work, and is projected to wipe out $28 trillion in output over the next […]

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Chart of the WeekThe Crisis is Not Over, Keep Spending (Wisely)

By Oya Celasun, Lone Christiansen, and Margaux MacDonald The pandemic-induced economic crisis is set to leave deep scars. Human capital erosion from prolonged high unemployment and school closures, value destruction from bankruptcies, and constraints on future fiscal policy from elevated public debt top the list. Groups that were already poor and vulnerable are set to […]

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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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Pandemic Persistence Clouds Latin America and Caribbean Recovery

By Samuel Pienknagura, Jorge Roldós, and Alejandro Werner COVID-19 has hit Latin America and the Caribbean harder than other parts of the world, both in human and economic terms. The relatively large human toll is evident: with only 8.2 percent of the world population, the region had 28 percent of cases and 34 percent of […]

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Europe Needs to Maintain Strong Policy Support to Sustain the Recovery

By Alfred Kammer The pandemic is exacting a heavy toll on Europe. More than 240,000 people have lost their lives. Millions have suffered the illness themselves, the loss of loved ones, or major disruption in their work, their businesses, and their daily lives. The economic impact of the pandemic has been enormous. Our latest Regional […]

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Hirshleifer on Regression to Savagery

In researching my latest Defining Ideas article due tomorrow, I came across this paragraph from UCLA economics professor Jack Hirshleifer. One thing to know about Jack was how incredibly careful a scholar he was.

Substantively, the historical review here suggests an extraordinary resiliency of human populations and social structures. It is of course impossible to prove that social breakdown will never occur in the aftermath of disaster, especially when we contemplate the unprecedented catastrophe of nuclear war. But the lurid picture of post-disaster regression to savagery, that staple of fiction and of popular thought, can draw no support from the historical record.

This is from Jack Hirshleifer, Economic Behavior in Adversity, University of Chicago Press, 1987, p. 6.

Notice the word “no.” That’s why I emphasized how careful a scholar he was. He did not use the word “no” lightly.

I had Jack cover the highlights of his book for The Concise Encyclopedia of Economics. His article is titled “Disaster and Recovery.”

My one quibble is his use of the word “extraordinary.” If it happens virtually every time there’s a disaster, it, fortunately, is not extraordinary.



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