President Donald Trump has been boasting for weeks of a “super V” economic recovery. But figures released today show an economy still far from fully recovered.
The “super V” phrase is now a staple at his campaign rallies. On Oct. 28 in Arizona, he said, “This is going to be better and you see where we’re going. It’s a super V. It’s a super V.” Four days earlier in Ohio, he said that “we’re doing a super V, we’re going up. …I mean, it’s amazing, actually amazing. We have a super V.”
He has been pushing the idea for weeks, using it way back on Sept. 10 as he boarded Air Force One near Washington, D.C.: “[O]ur economy is very good. We’re in a ‘super V.’” He repeated it Sept. 23 at the White House: “We have a ‘V.’ We may have a ‘super V.’ And it’s coming back fast.”
It’s true that the economy is improving, but not to the extent the president suggests.
Yes, the economy grew at a record annual rate of 33.1% in the third quarter, according to official figures released Oct. 29 by the Bureau of Economic Analysis. And that followed a 31.4% drop in the previous quarter, also a record. And that sounds superficially like a “V” shaped recovery, even a “super” V.
“GDP number just announced,” the president tweeted after the BEA released its third-quarter estimate. “Biggest and Best in the History of our Country, and not even close.”
But actually, the economy still has a long way to go. Dig a little more deeply into the latest figures and we see that real (inflation-adjusted) gross domestic product in the most recent quarter was still 2.9% below where it had been in the same quarter a year earlier (Table 6).
The usual way of expressing GDP growth can be confusing when the annual rates swing so widely. The annual-rate figures are roughly four times larger (in either direction) than the actual changes in GDP levels, because they express what the change would be over an entire year, if the change continued at the same rate for all four quarters.
Looking at the simple quarter-to-quarter changes in the level of GDP (Table 3), we can calculate that the economy shrank by 10.1% in the first six months of this year, including a 9% drop in the second quarter. But the rebound in the most recent quarter was 7.4% — a record to be sure, but still far short of a full recovery.
Indeed, as of September total employment was still 10.7 million below where it had been in February (and 3.9 million lower than where it was when Trump took office in January 2017). The nation has regained half (51%) of the nearly 22.2 million jobs lost in March and April.
And the recovery has slowed. Monthly gains in employment peaked in June and have been lower in each succeeding month.
Looking forward, most of the 63 economists surveyed by the Wall Street Journal from Oct. 2 to 6 said they expect it will be the fourth quarter of 2021 or later before real GDP returns to the peak level seen in the final quarter of last year. And the outlook for jobs was even worse; most said they expect it will be 2023 — or even later — before total employment recovers.
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