U.S. GDP Bounce Back
After a change of -5.0% annualized in ‘real’ (inflation-adjusted) gross domestic product (GDP) in Q1 of this year, the U.S. economy plummeted -32.9% in Q2. Annualizing the number essentially means compounding the quarter-to-quarter change to obtain a yearly rate. (The result is usually close to multiplying by four.) The quarter-to-quarter change in Q2 was about -9.0%.
In Q3, there will be a big bounce back. A Q/Q increase of +7.0% to +8.0% will yield an outsized number for GDP growth approaching +30.0% annualized. This will inspire a lot of celebratory backslapping, but it will be deceptive and way too early to uncork the champagne.
September’s jobs numbers tell a truer story. The month-to-month increase in U.S. employment may have been an eye-popping +661,000, but it showed a third straight month of deceleration. The improvement in the labor market has been losing steam.
Graph 1
