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Don’t let flashy 3rd quarter GDP growth fool you, the economy is still in a big hole – Brookings Institution

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When Gross Domestic Product (GDP) growth data for the 3rd quarter of 2020 is released on October 29th, it will almost certainly break records.  Many analysts project growth over 30 percent at an annual rate – roughly twice as high as any quarterly growth rate since World War II.

Yet despite this phenomenal-sounding growth, the economy will still be in a considerable hole, is actually slowing down, and presents a strong case for concern. Some basic math and data can help pierce through the mirage.

One reason 30 percent growth doesn’t mean the economy is healed stems from how percentage changes work when going down and then up. If you own a stock priced at $100 and it drops 30 percent, it is now worth $70. If it gains back 30 percent, it is then worth $91 (the gain is just $21 because 30 percent of 70 is 21). In the same manner, the large drop in output in the 2nd quarter followed by similar sized increases in the 3rd quarter will still leave a large hole. Even if GDP growth is 30 percent at an annual rate in the third quarter, output will still be more than 4 percent below its level at the end of 2019, which is more than the farthest the economy ever was from its prior peak in the Great Recession.

In addition, in the United States, we typically report growth numbers at an annualized rate. This way of reporting tells you how much the economy would grow or shrink if it kept up that pace for a full year. When there are huge swings up or down (like now) that can be a bit misleading. It made the drop in the second quarter seem larger than it was, and now makes the rebound seem larger as well.

It is also important to recognize that rapid 3rd quarter growth does not mean the economy has strong momentum now. Third quarter growth measures the average level of output in July through September compared to the average in April through June. The very low level of output in April and May set a low baseline, meaning almost any bounce back at all would generate a huge growth rate for the third quarter.

One way to see how much of 3rd quarter GDP growth comes from earlier in the year is to look at the growth in hours worked. Hours worked are often a good proxy for GDP growth, and grew by 25% at an annual rate between the second and third quarters. When looking at the monthly hours worked compared to the quarterly average (used to generate the quarterly growth rate), it is clear that the second quarter average is held down by the low April level, and in fact much of the growth that lifts the third quarter above the second actually came due to the rapid rebound in May and June. In fact, when calculating the growth rate, well over half of the growth comes from May and June. Had hours worked simply stayed at the June level throughout the third quarter, the 3rd quarter growth rate would still be 15% at an annual rate.

Hours Worked

Other evidence also demonstrates that the rebound in the economy has been slowing down over the late summer and into the fall. For each month from June to August, personal consumption growth was slower than in the month before. The same was true of retail sales through the summer, though it rebounded slightly in September. The Chicago Federal Reserve National Economic Activity Index, which pulls together over 80 data series from consumption to employment to production indicated that growth in August was the slowest it has been since the economy began to recover in May.

This slower growth is problematic given the huge hole in employment. Employment in the United States is still more than 10 million jobs below its level in February. Job growth, which broke records in June with almost 4.8 million jobs gained, slowed to 1.8 million jobs gained in July, 1.5 million in August, down to 660,000 jobs gained in September. If job growth continues to slow, it will take years to bring the economy back to its level of employment before the COVID recession. Job growth certainly does not look like a “V” anymore.

Payroll Employment

In many ways, the slowing job growth is not a surprise. Many of the jobs gained over the early summer stemmed from rehiring workers who had been on temporary layoff.  In April, 78 percent of the unemployed considered themselves on temporary layoff; that is down to 37 percent in September. Re-employing a worker from temporary layoff is much easier than matching an unemployed worker to a new firm. The number of individuals who say they are on permanent layoff has also grown considerably, from 1.5 million in March to 3.8 million in September. This rise in permanent layoffs is unusually swift. In the first 6 months of the Great Recession, the number of permanent layoffs grew just half a million. Furthermore, research suggests people overestimate the likelihood of re-employment and each month they are out of work reduces the chances their layoff is in fact temporary. As time passes, improvements in the labor market will become harder.

Permanent Jobs Lost

The number of unemployed actually understates the problem as millions of individuals have left the labor force. Many rejoined over the summer, but the labor force is still more than 4 million workers smaller than it was prior to the crisis, and it contracted in September, a disturbing stall in momentum.

Even as the economy was growing, there was evidence of extreme distress amongst families. Lines at foodbanks have shocked many. Surveys suggest surges in food insecurity. Reductions in employment, secondary incomes, tips, and gig work have left many families on the brink. Over 2.4 million workers have been unemployed for more than 27 weeks, a number that is sharply increasing and demonstrating extreme hardships for many households.

These indicators suggest the economy needs more help. First, it is essential to control the virus. Many sections of the economy simply cannot restart until there is greater safety and better confidence in the safety of workers and consumers. In addition, the economy will continue to need fiscal support. The unemployed need more financial aid. Small firms – especially those in heavily impacted sectors – simply cannot survive without assistance. State and local governments are increasingly laying off workers as their budgets are under extreme stress. Smart fiscal policy can help keep the recession from turning into an even longer and more painful downturn than it already is.

The flashy GDP growth number for the 3rd quarter is more a statistical quirk and reflection of the sharp dive and subsequent bounce in the spring, not an indication of current momentum. We cannot count on the economy to heal itself, it will take direct action.

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India's economy contracts by 7.5%, enters its 1st recession – 570 News

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NEW DELHI — India’s economy contracted by 7.5% in the July-September quarter following a record slump of 23.9% in the previous three months, pushing the country into a recession for the first time in its history.

The contraction occurred despite the government’s lifting of a strict two-month lockdown imposed across the country in March after the outbreak of the pandemic.

A country enters a technical recession if its economy contracts for two successive quarters.

Data released Friday by the National Statistical Office showed industry normalizing faster than the service sector.

Manufacturing grew by 0.6% in July-September after shrinking by a massive 39% in the preceding quarter, the report said. While the agriculture sector grew by 3.4%, trade and services contracted by 15.6%, it said.

The 23.9% GDP contraction in the April-June quarter triggered massive unemployment in small and medium-size businesses and created rural distress.

The government announced stimulus packages after it lifted the lockdown imposed in March.

In May, it introduced a $266 billion package to boost consumer demand and manufacturing. A large part of the package was actually loans provided by banks, many of them without collateral.

That was followed by a $35.14 billion package early this month to stimulate the economy by boosting jobs, consumer demand, manufacturing, agriculture and exports hit by the coronavirus pandemic.

The objective of the incentives is to attract investment and enable India to become part of the global supply chain.

Finance Minister Nirmala Sitharaman said a strong economic recovery is taking root, citing an increase in tax collections for goods and services.

Ashok Sharma, The Associated Press

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India Credit Downgrades Abate on Signs Economy Bouncing Back – Yahoo Canada Finance

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GlobeNewswire

Insights on the Contactless Biometrics Technology APAC Market to 2026 – Industry Analysis and Forecast

Dublin, Nov. 27, 2020 (GLOBE NEWSWIRE) — The “Asia Pacific Contactless Biometrics Technology Market By Component, By Application, By End User, By Country, Industry Analysis and Forecast, 2020 – 2026” report has been added to ResearchAndMarkets.com’s offering. The Asia Pacific Contactless Biometrics Technology Market is expected to witness market growth of 21% CAGR during the forecast period (2020-2026). Constant technological advances in enhanced experience are anticipated to provide positive opportunities for market growth over the coming years. The increase in disposable income worldwide is expected to drive the market. Brand and technology-sensitive buyers are anticipated to contribute to market demand. Smartphones are characterized by innovative features, technology and design, evolving product life cycles, extreme pricing, changing product imitation and technological advancements. The simplicity with which services, images, gallery and documentation are handled has intensified the reliance on smartphones. Growing demand and interest in music, gaming, travel navigation, entertainment; social and personalization are expected to be key drivers for the smartphone market. These are gradually becoming an alternative to PDAs, heavy laptops and space-consuming desktops. Various banks, fintech and financial services companies have established partners to provide bio-authentication for secure on-boarding and transactions, with facial, finger and voice recognition. Ubiquitous contactless payments have always been a long-term inevitability. All it took for them to become a smart short-term investment was for customers to avoid treating retail keypads as a luxury and more like a factor for disease. Based on Component, the market is segmented into Software, Hardware and Services. Based on Application, the market is segmented into Face, Voice, Fingerprint & Hand Geometry, Iris and Others. Based on End User, the market is segmented into Government, Transport & Logistics, Defense & Security, Consumer Electronics, Healthcare & Life Sciences, Banking & Finance and Others. Based on countries, the market is segmented into China, Japan, India, South Korea, Singapore, Malaysia, and Rest of Asia Pacific. The market research report covers theanalysis of key stake holders of the market. Key companies profiled in the report include Fujitsu Limited, Thales Group S.A. (Gemalto NV), Assa Abloy AB, NEC Corporation, Aware, Inc., Fingerprint Cards AB, IDEMIA SAS (Advent International, Inc.), Touchless Biometric Systems AG, M2SYS Technology, Inc., and nVIAsoft Corporation. Unique Offerings from the Publisher * Exhaustive coverage * Highest number of market tables and figures * Subscription based model available * Guaranteed best price * Assured post sales research support with 10% customization freeKey Topics Covered: Chapter 1. Market Scope & Methodology 1.1 Market Definition 1.2 Objectives 1.3 Market Scope 1.4 Segmentation 1.4.1 Asia Pacific Contactless Biometrics Technology Market, by Component 1.4.2 Asia Pacific Contactless Biometrics Technology Market, by Application 1.4.3 Asia Pacific Contactless Biometrics Technology Market, by End User 1.4.4 Asia Pacific Contactless Biometrics Technology Market, by Country 1.5 Methodology for the research Chapter 2. Market Overview 2.1 Introduction 2.1.1 Overview 2.1.2 EXECUTIVE SUMMARY 2.1.3 Market Composition and Scenario 2.2 Key Factors Impacting the Market 2.2.1 Market Drivers 2.2.2 Market Restraints Chapter 3. Competition Analysis – Global 3.1 Cardinal Matrix 3.2 Recent Industry Wide Strategic Developments 3.2.1 Partnerships, Collaborations and Agreements 3.2.2 Product Launches and Product Expansions 3.2.3 Mergers & Acquisitions 3.3 Top Winning Strategies 3.3.1 Key Leading Strategies: Percentage Distribution (2016-2020) 3.3.2 Key Strategic Move: (Partnerships, Collaborations, and Agreements : 2017, Nov – 2020,Apr) Leading Players Chapter 4. Asia Pacific Contactless Biometrics Technology Market by Component 4.1 Asia Pacific Contactless Biometrics Technology Software Market by Country 4.2 Asia Pacific Contactless Biometrics Technology Hardware Market by Country 4.3 Asia Pacific Contactless Biometrics Technology Services Market by Country Chapter 5. Asia Pacific Contactless Biometrics Technology Market by Application 5.1 Asia Pacific Face Contactless Biometrics Technology Market by Country 5.2 Asia Pacific Voice Contactless Biometrics Technology Market by Country 5.3 Asia Pacific Fingerprint & Hand Geometry Contactless Biometrics Technology Market by Country 5.4 Asia Pacific Iris Contactless Biometrics Technology Market by Country 5.5 Asia Pacific Other Application Contactless Biometrics Technology Market by Country Chapter 6. Asia Pacific Contactless Biometrics Technology Market by End User 6.1 Asia Pacific Government Contactless Biometrics Technology Market by Country 6.2 Asia Pacific Transport & Logistics Contactless Biometrics Technology Market by Country 6.3 Asia Pacific Defense & Security Contactless Biometrics Technology Market by Country 6.4 Asia Pacific Consumer Electronics Contactless Biometrics Technology Market by Country 6.5 Asia Pacific Healthcare & Life Sciences Contactless Biometrics Technology Market by Country 6.6 Asia Pacific Banking & Finance Contactless Biometrics Technology Market by Country 6.7 Asia Pacific Others Contactless Biometrics Technology Market by Country Chapter 7. Asia Pacific Contactless Biometrics Technology Market by Country 7.1 China Contactless Biometrics Technology Market 7.1.1 China Contactless Biometrics Technology Market by Component 7.1.2 China Contactless Biometrics Technology Market by Application 7.1.3 China Contactless Biometrics Technology Market by End User 7.2 Japan Contactless Biometrics Technology Market 7.2.1 Japan Contactless Biometrics Technology Market by Component 7.2.2 Japan Contactless Biometrics Technology Market by Application 7.2.3 Japan Contactless Biometrics Technology Market by End User 7.3 India Contactless Biometrics Technology Market 7.3.1 India Contactless Biometrics Technology Market by Component 7.3.2 India Contactless Biometrics Technology Market by Application 7.3.3 India Contactless Biometrics Technology Market by End User 7.4 South Korea Contactless Biometrics Technology Market 7.4.1 South Korea Contactless Biometrics Technology Market by Component 7.4.2 South Korea Contactless Biometrics Technology Market by Application 7.4.3 South Korea Contactless Biometrics Technology Market by End User 7.5 Singapore Contactless Biometrics Technology Market 7.5.1 Singapore Contactless Biometrics Technology Market by Component 7.5.2 Singapore Contactless Biometrics Technology Market by Application 7.5.3 Singapore Contactless Biometrics Technology Market by End User 7.6 Malaysia Contactless Biometrics Technology Market 7.6.1 Malaysia Contactless Biometrics Technology Market by Component 7.6.2 Malaysia Contactless Biometrics Technology Market by Application 7.6.3 Malaysia Contactless Biometrics Technology Market by End User 7.7 Rest of Asia Pacific Contactless Biometrics Technology Market 7.7.1 Rest of Asia Pacific Contactless Biometrics Technology Market by Component 7.7.2 Rest of Asia Pacific Contactless Biometrics Technology Market by Application 7.7.3 Rest of Asia Pacific Contactless Biometrics Technology Market by End User Chapter 8. Company Profiles 8.1 Fujitsu Limited 8.1.1 Company Overview 8.1.2 Financial Analysis 8.1.3 Recent strategies and developments: 8.1.3.1 Partnerships, Collaborations, and Agreements: 8.1.3.2 Product Launches and Product Expansions: 8.1.3.3 Acquisition and Mergers: 8.1.4 SWOT Analysis 8.2 Thales Group S.A. (Gemalto NV) 8.2.1 Company Overview 8.2.2 Financial Analysis 8.2.3 Segmental and Regional Analysis 8.2.4 Research and Development Expense 8.2.5 Recent strategies and developments: 8.2.5.1 Partnerships, Collaborations, and Agreements: 8.2.6 SWOT Analysis 8.3 Assa Abloy AB 8.3.1 Company Overview 8.3.2 Financial Analysis 8.3.3 Segment and Regional Analysis 8.3.4 Research & Development Expense 8.3.5 Recent strategies and developments: 8.3.5.1 Partnerships, Collaborations, and Agreements: 8.3.5.2 Acquisition and Mergers: 8.3.6 SWOT Analysis 8.4 NEC Corporation 8.4.1 Company Overview 8.4.2 Financial Analysis 8.4.3 Segmental and Regional Analysis 8.4.4 Research & Development Expenses 8.4.5 Recent strategies and developments: 8.4.5.1 Partnerships, Collaborations, and Agreements: 8.4.5.2 Product Launches and Product Expansions: 8.4.5.3 Acquisition and Mergers: 8.4.6 SWOT Analysis 8.5 Aware, Inc. 8.5.1 Company Overview 8.5.2 Financial Analysis 8.5.3 Regional Analysis 8.5.4 Research & Development Expense 8.5.5 Recent strategies and developments: 8.5.5.1 Product Launches and Product Expansions: 8.6 Fingerprint Cards AB 8.6.1 Company Overview 8.6.2 Financial Analysis 8.6.3 Research & Development Expense 8.6.4 Recent strategies and developments: 8.6.4.1 Partnerships, Collaborations, and Agreements: 8.6.4.2 Product Launches and Product Expansions: 8.7 IDEMIA SAS (Advent International, Inc.) 8.7.1 Company Overview 8.7.2 Recent strategies and developments: 8.7.2.1 Partnerships, Collaborations, and Agreements: 8.8 Touchless Biometric Systems AG 8.8.1 Company Overview 8.9 M2SYS Technology, Inc. 8.9.1 Company Overview 8.10 nVIAsoft Corporation 8.10.1 Company overview For more information about this report visit https://www.researchandmarkets.com/r/h2qip3Research and Markets also offers Custom Research services providing focused, comprehensive and tailored research. CONTACT: CONTACT: ResearchAndMarkets.com Laura Wood, Senior Press Manager press@researchandmarkets.com For E.S.T Office Hours Call 1-917-300-0470 For U.S./CAN Toll Free Call 1-800-526-8630 For GMT Office Hours Call +353-1-416-8900

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Robust economy ailing after bout with pandemic – Business in Vancouver

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The year 2019 seems like a distant memory in the COVID-19 era, but provincial economic accounts data confirmed that, heading into 2020, B.C.’s economy remained among the strongest in the country.

On an expenditure basis, real gross domestic product (GDP) expanded by 2.7% compared with 1.9% nationally and was on par with 2018’s performance.

B.C.’s solid gain last year was achieved despite weakness in most key segments. Household consumption growth decelerated sharply to 1.7% in 2019, down from 2.8% in 2018. This was the slowest expansion since a 0.3% gain in 2009.

Slower consumption growth was driven by fewer vehicle sales, weaker ancillary spending related to housing, and flat non-durable goods purchases.

Household consumption makes up about 60% of GDP. Overall consumption expenditures growth of 2.1% was propped up by stronger government spending, which rose 3.1%.

Housing was a drag on the economy. Investment in residential structures shrank by 1.5% during the year, following a 2.5% contraction in 2018.

Trade was also dismal. Real export growth slowed to 0.9% from 3.5% in 2018. This was partly offset by slowing imports, which decelerated to a gain of 2.7%, from 3.3% in 2018. 

Weaker growth across key segments was offset by a huge increase in investment spending. Private-sector investment jumped 22% from 2018 on a 35% increase in structure investment. Machinery and equipment was flat. Private investment contributed about 74% of headline growth. This surge reflected build-out of liquefied natural gas projects. Government investment, which gained 8.8%, also outperformed, reflecting investment in schools, hospitals and other infrastructure.

Nominal GDP came in at 4.3%, compared with 4.9% growth in 2018. Economic growth largely accrued to employees during the year. Aggregate wages and salaries were up 5.7%, as net operating surplus or profits fell 7%.

With mixed gains in 2019, headline growth marked a modest handoff to 2020 – but a short-lived one, as COVID-19 ravaged the economy this year. Economic output is forecast to contract by nearly 6% in 2020 due to the pandemic-driven shuttering of parts of the economy earlier in the year and the continuing effects of health measures. Rising COVID-19 cases in the fall and winter will pause the recovery phase observed since May, but growth is forecast to reach about 4% in 2021. •

Bryan Yu is deputy chief economist at Central 1 Credit Union.

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