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The Economic Slowdown in the U.S. and Europe is the Worst on Record

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The coronavirus pandemic’s toll on the global economy became emphatically clearer this week. Here's a look at what the numbers show.

The coronavirus pandemic’s toll on the global economy became emphatically clearer this week. Here's a look at what the numbers show.

  1. The coronavirus pandemic’s toll on the global economy became emphatically clearer this week, with record drops in GDP in Europe and the U.S. Here's a look at what the numbers show.

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  2. In Europe, the economy tumbled into its worst recession on record in the 2nd quarter this year, with the sharpest contractions since statistics started being kept in 1995

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  3. U.S. economic output fell 9.5% in the second quarter, by far the largest drop in the 70+ years of data. For context: Economic output fell 4% during the entirety of the Great Recession -- and took 18 months to get there.

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  4. In the U.S., economic output fell at its fastest pace on record in the spring, shrinking nearly $2 trillion in the 2nd quarter. In essence, the slowdown wiped out 5 years of economic growth in a matter of months.

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  5. The hope last spring was that by shutting down the economy and providing trillions in aid, we could control the virus and pave the way for a rapid rebound. We got the shutdown. But we didn't control the virus, and now the rebound is fading, too.

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  6. There are only 2 possible comparisons in modern American history for how sharply U.S. economic output fell last spring: the Great Depression and the demobilization after World War II, both of which occurred before the advent of modern economic statistics

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  7. The U.S. Labor Department also reported that another 2 million people filed for unemployment benefits last week — the 2nd weekly increase in a row after nearly 4 months of declines

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  8. Meanwhile, another 2 million people filed for unemployment benefits last week. (That's 1.2 million regular state claims, NSA, plus 800k under the Pandemic Unemployment Assistance program.)

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  9. On both sides of the Atlantic, governments are trying to respond: —Federal aid in the U.S. is on the verge of running out, and Washington is at an impasse over another stimulus. —The EU agreed to a stimulus of 750 billion euros, or about $884 billion, to rescue their economies.

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  10. Here’s a look at the economic proposals released by Democrats and Republicans for another round of federal aid to address the coronavirus pandemic.

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  11. Despite the awful numbers today, Europe is poised to mount an economic recovery faster than the US, revealing a truism of the pandemic: The threat to livelihoods is the virus itself. Our story, with

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  12. Fascinating to see how the pandemic affected spending in different ways. Spending on services plunged (led by huge drops on restaurants and recreation). Much smaller drop in goods, especially durable goods. And big increase in a few categories, like recreational vehicles.

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  13. Business investment fell sharply too, but unlike with consumer spending, the drop wasn't totally out of line with past recessions. Basically equivalent to the worst quarterly decline of the Great Recession.

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  14. 31 Jul 2020

    Yes, today's GDP data were really bad. Really bad. But investors focused on the future say for the first time in years, Europe is looking pretty good. (NB: This is not investment advice 🙃)

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