Contraction of United States GDP at 32.9 Percent SAAR in First Quarter 2020 in the Global Recession, with Output in the US Reaching a High in Feb 2020 (https://www.nber.org/cycles.html), in the Lockdown of Economic Activity in the COVID-19 Event, Mediocre Cyclical United States Growth in the Lost Economic Cycle of the Global Recession with Economic Growth Underperforming Below Trend Worldwide, Contraction of Real Private Fixed Investment at 29.9 Percent SAAR, United States Terms of Trade, Beginning Recovery in United States New House Sales, United States House Prices, World Cyclical Slow Growth, and Government Intervention in Globalization: Part I

Carlos M. Pelaez

© Carlos M. Pelaez, 2009, 2010, 2011, 2012, 2013, 2014, 2015, 2016, 2017, 2018, 2019, 2020.

IA Mediocre Cyclical United States Economic Growth

            IA1 Stagnating Real Private Fixed Investment

IID United States Terms of International Trade

IIA United States Housing Collapse

            IIA1 Sales of New Houses

            IIA2 United States House Prices

III World Financial Turbulence

IV Global Inflation

V World Economic Slowdown

VA United States

VB Japan

VC China

VD Euro Area

VE Germany

VF France

VG Italy

VH United Kingdom

VI Valuation of Risk Financial Assets

VII Economic Indicators

VIII Interest Rates

IX Conclusion

References

Appendixes

Appendix I The Great Inflation

IIIB Appendix on Safe Haven Currencies

IIIC Appendix on Fiscal Compact

IIID Appendix on European Central Bank Large Scale Lender of Last Resort

IIIG Appendix on Deficit Financing of Growth and the Debt Crisis

The revisions and enhancements of United States GDP and personal income accounts by the Bureau of Economic Analysis (BEA) (http://bea.gov/iTable/index_nipa.cfm) also provide critical information in assessing the current rhythm of US economic growth. The economy appears to be moving at a pace around 1.2 percent per year. Table Summary GDP provides the data.

1. Average Annual Growth in the Past Thirty-Three Quarters. GDP growth in the four quarters of 2012, the four quarters of 2013, the four quarters of 2014, the four quarters of 2015, the four quarters of 2016, the four quarters of 2017, the four quarters of 2018, the four quarters of 2019 and the two quarters of 2020 accumulated to 7.5 percent. This growth is equivalent to 0.9 percent per year, obtained by dividing GDP in IIQ2020 of $17,205.8 billion by GDP in IVQ2011 of $16,004.1 billion and compounding by 4/34: {[($17,205.8/$16,004.1)^4/34 -1]100 = 0.9 percent}.
2. Average Annual Growth in the Past Four Quarters. GDP growth in the four quarters from IQ2019 to IIQ2020 accumulated to minus 9.5 percent that is equivalent to minus 32.9 percent in a year. This is obtained by dividing GDP in IIQ2020 of $17,205.8 billion by GDP in IIQ2019 of $19,020.6 billion and compounding by 4/4: {[($17,205.8/$19,020.6)^4/4 -1]100 = -9.5%}. The US economy decreased 9.5 percent in IIQ2020 relative to the same quarter a year earlier in IIQ2019 (See Table 6 at https://www.bea.gov/sites/default/files/2020-07/gdp2q20_adv.pdf and the complete data at https://apps.bea.gov/iTable/index_nipa.cfm). Growth was at annual equivalent 5.5 percent in IIQ2014 and 5.0 percent IIIQ2014 and only at 2.3 percent in IVQ2014. GDP grew at annual equivalent 3.8 percent in IQ2015, 2.7 percent in IIQ2015, 1.5 percent in IIIQ2015 and 0.6 percent in IVQ2015. GDP grew at annual equivalent 2.3 percent in IQ2016 and at 1.3 percent annual equivalent in IIQ2016. GDP increased at 2.2 percent annual equivalent in IIIQ2016 and at 2.5 percent in IVQ2016. GDP grew at annual equivalent 2.3 percent in IQ2017 and at annual equivalent 1.7 percent in IIQ2017. GDP grew at annual equivalent 2.9 percent in IIIQ2017. GDP grew at annual equivalent 3.9 percent in IVQ2017. GDP grew at annual equivalent 3.8 percent in IQ2018, increasing at 2.7 percent annual equivalent in IIQ2018. GDP grew at annual equivalent 2.1 percent in IIIQ2018 and at 1.3 percent in IVQ2018. GDP grew at annual equivalent 2.9 percent in IQ2019 and at annual equivalent 1.5 percent in IIQ2019. GDP grew at annual equivalent 2.6 percent in IIIQ2019 and at 2.4 percent annual equivalent in IVQ2019. Growth was at annual equivalent minus 5.0 percent in IQ2020. Growth was at annual equivalent minus 32.9 percent in IIQ2020. Another important revelation of the revisions and enhancements is that GDP was flat at 0.1 in IVQ2012, which is in the borderline of contraction, and negative in IQ2014. US GDP fell 0.3 percent in IQ2014. The rate of growth of GDP in the revision of IIIQ2013 is 3.2 percent in seasonally adjusted annual rate (SAAR).

Table Summary GDP, US, Real GDP and Percentage Change Relative to IVQ2007 and Prior Quarter, Billions Chained 2012 Dollars and ∆%

	Real GDP, Billions Chained 2012 Dollars	∆% Relative to IVQ2007	∆% Relative to Prior Quarter	∆% over Year Earlier
IVQ2007	15,762.0	NA	0.6	2.0
IVQ2011	16,004.1	1.5	1.2	1.6
IQ2012	16,129.5	2.3	0.8	2.7
IIQ2012	16,198.8	2.8	0.4	2.4
IIIQ2012	16,220.7	2.9	0.1	2.5
IVQ2012	16,239.1	3.0	0.1	1.5
IQ2013	16,383.0	3.9	0.9	1.6
IIQ2013	16,403.2	4.1	0.1	1.3
IIIQ2013	16,531.7	4.9	0.8	1.9
IVQ2013	16,663.6	5.7	0.8	2.6
IQ2014	16,616.5	5.4	-0.3	1.4
IIQ2014	16,841.5	6.8	1.4	2.7
IIIQ2014	17,047.1	8.2	1.2	3.1
IVQ2014	17,143.0	8.8	0.6	2.9
IQ2015	17,305.8	9.8	0.9	4.1
IIQ2015	17,422.8	10.5	0.7	3.5
IIIQ2015	17,486.0	10.9	0.4	2.6
IVQ2015	17,514.1	11.1	0.2	2.2
IQ2016	17,613.3	11.7	0.6	1.8
IIQ2016	17,668.2	12.1	0.3	1.4
IIIQ2016	17,764.4	12.7	0.5	1.6
IVQ2016	17,876.2	13.4	0.6	2.1
IQ2017	17,977.3	14.1	0.6	2.1
IIQ2017	18,054.1	14.5	0.4	2.2
IIIQ2017	18,185.6	15.4	0.7	2.4
IVQ2017	18,359.4	16.5	1.0	2.7
IQ2018	18,530.5	17.6	0.9	3.1
IIQ2018	18,654.4	18.4	0.7	3.3
IIIQ2018	18,752.4	19.0	0.5	3.1
IVQ2018	18,813.9	19.4	0.3	2.5
IQ2019	18,950.3	20.2	0.7	2.3
IIQ2019	19,020.6	20.7	0.4	2.0
IIIQ2019	19,141.7	21.4	0.6	2.1
IVQ2019	19,254.0	22.2	0.6	2.3
IQ2020	19,010.8	20.6	-1.3	0.3
IIQ2020	17,205.8	9.2	-9.5	-9.5
Cumulative ∆% IQ2012 to IIQ2020	7.5
Annual Equivalent ∆%	0.9

Source: US Bureau of Economic Analysis https://apps.bea.gov/iTable/index_nipa.cfm

Table I-5 shows the mediocre average annual equivalent growth rate of 1.2 percent of the US economy in the forty-four quarters of the current cyclical expansion from IIIQ2009 to IIQ2020. There is sharp contraction in IIQ2020 at SAAR of minus 32.9 percent in the global recession with output in the US reaching a high in Feb 2020 (https://www.nber.org/cycles.html), in the lockdown of economic activity in the COVID-19 event.  In sharp contrast, the average growth rate of GDP was:

• 5.7 percent in the first thirteen quarters of expansion from IQ1983 to IQ1986
• 5.3 percent in the first fifteen quarters of expansion from IQ1983 to IIIQ1986
• 5.1 percent in the first sixteen quarters of expansion from IQ1983 to IVQ1986
• 5.0 percent in the first seventeen quarters of expansion from IQ1983 to IQ1987
• 5.0 percent in the first eighteen quarters of expansion from IQ1983 to IIQ1987
• 4.9 percent in the first nineteen quarters of expansion from IQ1983 to IIIQ1987
• 5.0 percent in the first twenty quarters of expansion from IQ1983 to IVQ1987
• 4.9 percent in the first twenty-first quarters of expansion from IQ1983 to IQ1988
• 4.9 percent in the first twenty-two quarters of expansion from IQ1983 to IIQ1988
• 4.8 percent in the first twenty-three quarters of expansion from IQ1983 to IIIQ1988
• 4.8 percent in the first twenty-four quarters of expansion from IQ1983 to IVQ1988
• 4.8 percent in the first twenty-five quarters of expansion from IQ1983 to IQ1989
• 4.7 percent in the first twenty-six quarters of expansion from IQ1983 to IIQ1989
• 4.6 percent in the first twenty-seven quarters of expansion from IQ1983 to IIIQ1989
• 4.5 percent in the first twenty-eight quarters of expansion from IQ1983 to IVQ1989
• 4.5 percent in the first twenty-nine quarters of expansion from IQ1983 to IQ1990
• 4.4 percent in the first thirty quarters of expansion from IQ1983 to IIQ1990
• 4.3 percent in the first thirty-one quarters of expansion from IQ1983 to IIIQ1990
• 4.0 percent in the first thirty-two quarters of expansion from IQ1983 to IVQ1990
• 3.8 percent in the first thirty-three quarters of expansion from IQ1983 to IQ1991
• 3.8 percent in the first thirty-four quarters of expansion from IQ1983 to IIQ1991
• 3.8 percent in the first thirty-five quarters of expansion from IQ1983 to IIIQ1991
• 3.7 percent in the thirty-six quarters of expansion from IQ1983 to IVQ1991
• 3.7 percent in the thirty-seven quarters of expansion from IQ1983 to IQ1992
• 3.7 percent in the thirty-eight quarters of expansion from IQ1983 to IIQ1992
• 3.7 percent in the thirty-nine quarters of expansion from IQ1983 to IIIQ1992
• 3.8 percent in the forty quarters of expansion from IQ1983 to IVQ1992
• 3.7 percent in the forty-one quarters from IQ1983 to IQ1993
• 3.6 percent in the forty-two quarters from IQ1983 to IIQ1993
• 3.6 percent in the forty-three quarters from IQ1983 to IIIQ1993
• 3.7 percent in the forty-four quarters from IQ1983 to IVQ1993

The line “average first four quarters in four expansions” provides the average growth rate of 7.7 percent with 7.8 percent from IIIQ1954 to IIQ1955, 9.2 percent from IIIQ1958 to IIQ1959, 6.1 percent from IIIQ1975 to IIQ1976 and 7.9 percent from IQ1983 to IVQ1983. The United States missed this opportunity of high growth in the initial phase of recovery.  BEA data show the US economy in standstill relative to historical experience with annual growth of 2.6 percent in 2010 decelerating to 1.6 percent annual growth in 2011, 2.2 percent in 2012, 1.8 percent in 2013, 2.5 percent in 2014, 3.1 percent in 2015, 1.7 percent in 2016, 2.3 percent in 2017, 3.0 percent in 2018 and 2.2 percent in 2019 (http://www.bea.gov/iTable/index_nipa.cfm).  The expansion from IQ1983 to IQ1986 was at the average annual growth rate of 5.7 percent, 5.1 percent from IQ1983 to IVQ1986, 4.9 percent from IQ1983 to IIIQ1987, 5.0 percent from IQ1983 to IVQ1987, 4.9 percent from IQ1983 to IQ1988, 4.9 percent from IQ1983 to IIQ1988, 4.8 percent from IQ1983 to IIIQ1988. 4.8 percent from IQ1983 to IVQ1988, 4.8 percent from IQ1983 to IQ1989, 4.7 percent from IQ1983 to IIQ1989, 4.6 percent from IQ1983 to IIIQ1989. 4.5 percent from IQ1983 to IVQ1989, 4.5 percent from IQ1983 to IQ1990, 4.4 percent from IQ1983 to IIQ1990, 4.3 percent from IQ1983 to IIIQ1990. 4.0 percent from IQ1983 to IVQ1990. 3.8 percent from IQ1983 to IQ1991, 3.8 percent from IQ1983 to IIQ1991, 3.8 percent from IQ1983 to IIIQ1991. 3.7 percent from IQ1983 to IVQ1991, 3.7 percent from IQ1983 to IQ1992, 3.7 percent from IQ1983 to IIQ1992, 3.7 percent from IQ1983 to IIIQ1992, 3.8 percent from IQ1983 to IVQ1992, 3.7 percent from IQ1983 to IQ1993. 3.6 percent from IQ1983 to IIQ1993. 3.6 percent from IQ1983 to IIIQ1993, 3.7 percent from IQ1983 to IVQ1993 and at 7.9 percent from IQ1983 to IVQ1983. The National Bureau of Economic Research (NBER) dates a contraction of the US from IQ1990 (Jul) to IQ1991 (Mar) (https://www.nber.org/cycles.html). The expansion lasted until another contraction beginning in IQ2001 (Mar). US GDP contracted 1.3 percent from the pre-recession peak of $8983.9 billion of chained 2009 dollars in IIIQ1990 to the trough of $8865.6 billion in IQ1991 (https://apps.bea.gov/iTable/index_nipa.cfm). GDP grew 2.8 percent in the first four quarters of the expansion from IIIQ2009 to IIQ2010. GDP growth in the thirty-four quarters from IQ2012 to IIQ2020 accumulated to 18.6 percent. This growth is equivalent to 0.9 percent per year, obtained by dividing GDP in IIQ2020 of $17,205.8 billion by GDP in IVQ2011 of $16,004.1 billion and compounding by 4/34: {[($17,205.8/$16,004.1)^4/34 -1]100 = 0.9 percent}.

Table I-5, US, Number of Quarters, Cumulative Growth and Average Annual Equivalent Growth Rate in Cyclical Expansions

	Number of Quarters	Cumulative Growth ∆%	Average Annual Equivalent Growth Rate
IIIQ 1954 to IQ1957	11	12.8	4.5
First Four Quarters IIIQ1954 to IIQ1955	4	7.8
IIQ1958 to IIQ1959	5	10.0	7.9
First Four Quarters IIIQ1958 to IIQ1959	4	9.2
IIQ1975 to IVQ1976	8	8.3	4.1
First Four Quarters IIIQ1975 to IIQ1976	4	6.1
IQ1983-IQ1986 IQ1983-IIIQ1986 IQ1983-IVQ1986 IQ1983-IQ1987 IQ1983-IIQ1987 IQ1983 to IIIQ1987 IQ1983 to IVQ1987 IQ1983 to IQ1988 IQ1983 to IIQ1988 IQ1983 to IIIQ1988 IQ1983 to IVQ1988 IQ1983 to IQ1989 IQ1983 to IIQ1989 IQ1983 to IIIQ1989 IQ1983 to IVQ1989 IQ1983 to IQ1990 IQ1983 to IIQ1990 IQ1983 to IIIQ1990 IQ1983 to IVQ1990 IQ1983 to IQ1991 IQ1983 to IIQ1991 IQ1983 to IIIQ1991 IQ1983 to IVQ1991 IQ1983 to IQ1992 IQ1983 to IIQ1992 IQ1983 to IIIQ1992 IQ1983 to IVQ1992 IQ1983 to IQ1993 IQ1983 to IIQ1993 IQ1983 to IIIQ1993 IQ1983 to IVQ1993	13 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44	19.8 21.5 22.1 23.0 24.4 25.4 27.6 28.3 29.9 30.7 32.5 33.8 34.8 35.8 36.1 37.6 38.1 38.2 36.9 36.3 37.3 38.0 38.5 40.2 41.7 43.1 44.6 44.8 45.7 46.4 48.3	5.7 5.3 5.1 5.0 5.0 4.9 5.0 4.9 4.9 4.8 4.8 4.8 4.7 4.6 4.5 4.5 4.4 4.3 4.0 3.8 3.8 3.8 3.7 3.7 3.7 3.7 3.8 3.7 3.6 3.6 3.7
First Four Quarters IQ1983 to IVQ1983	4	7.9
Average First Four Quarters in Four Expansions*		7.7
IIIQ2009 to IIQ2020	44	13.7	1.2
First Four Quarters IIIQ2009 to IIQ2010		2.8

*First Four Quarters: 7.8% IIIQ1954-IIQ1955; 9.2% IIIQ1958-IIQ1959; 6.1% IIIQ1975-IQ1976; 7.8% IQ1983-IVQ1983

Source: Bureau of Economic Analysis https://apps.bea.gov/iTable/index_nipa.cfm

As shown in Tables I-4 and I-5 above the loss of real GDP in the US during the contraction was 4.0 percent but the gain in the cyclical expansion has been only 13.7 percent (first to the last row in Table I-5), using all latest revisions. As a result, the level of real GDP in IIQ2020 with the second estimate and revisions is higher by only 9.2 percent than the level of real GDP in IVQ2007. The US maintained growth at 3.0 percent on average over entire cycles with expansions at higher rates compensating for contractions. Growth at trend in the entire cycle from IVQ2007 to IIQ2020 and in the global recession with output in the US reaching a high in Feb 2020 (https://www.nber.org/cycles.html), in the lockdown of economic activity in the COVID-19 event would have accumulated to 44.7 percent. GDP in IIQ2020 would be $22,807.6 billion (in constant dollars of 2012) if the US had grown at trend, which is higher by $5601.8 billion than actual $17,205.8 billion. There are more than five trillion dollars of GDP less than at trend, explaining the 41.3 million unemployed or underemployed equivalent to actual unemployment/underemployment of 23.9 percent of the effective labor force with the largest part originating in the global recession with output in the US reaching a high in Feb 2020 (https://www.nber.org/cycles.html), in the lockdown of economic activity in the COVID-19 event (https://cmpassocregulationblog.blogspot.com/2020/07/increase-of-total-nonfarm-payroll-jobs.html and earlier https://cmpassocregulationblog.blogspot.com/2020/06/creation-of-three-million-private.html). Unemployment is decreasing while employment is increasing in initial adjustment of the lockdown of economic activity in the global recession resulting from the COVID-19 event (https://www.bls.gov/cps/employment-situation-covid19-faq-june-2020.pdf). US GDP in IQ2020 is 24.6 percent lower than at trend. US GDP grew from $15,762.0 billion in IVQ2007 in constant dollars to $17,205.8 billion in IQ2020 or 9.2 percent at the average annual equivalent rate of 0.7 percent. Professor John H. Cochrane (2014Jul2) estimates US GDP at more than 10 percent below trend. Cochrane (2016May02) measures GDP growth in the US at average 3.5 percent per year from 1950 to 2000 and only at 1.76 percent per year from 2000 to 2015 with only at 2.0 percent annual equivalent in the current expansion. Cochrane (2016May02) proposes drastic changes in regulation and legal obstacles to private economic activity. The US missed the opportunity to grow at higher rates during the expansion and it is difficult to catch up because growth rates in the final periods of expansions tend to decline. The US missed the opportunity for recovery of output and employment always afforded in the first four quarters of expansion from recessions. Zero interest rates and quantitative easing were not required or present in successful cyclical expansions and in secular economic growth at 3.0 percent per year and 2.0 percent per capita as measured by Lucas (2011May). There is cyclical uncommonly slow growth in the US instead of allegations of secular stagnation. There is similar behavior in manufacturing. There is classic research on analyzing deviations of output from trend (see for example Schumpeter 1939, Hicks 1950, Lucas 1975, Sargent and Sims 1977). The long-term trend is growth of manufacturing at average 2.9 percent per year from Jun 1919 to Jun 2020. Growth at 2.9 percent per year would raise the NSA index of manufacturing output (SIC, Standard Industrial Classification) from 108.2987 in Dec 2007 to 154.8159 in Jun 2020. The actual index NSA in Jun 2020 is 95.097 which is 38.6 percent below trend. The underperformance of manufacturing in Jun 2020 originates partly in the earlier global recession augmented by the current global recession with output in the US reaching a high in Feb 2020 (https://www.nber.org/cycles.html), in the lockdown of economic activity in the COVID-19. Manufacturing grew at the average annual rate of 3.3 percent between Dec 1986 and Dec 2006. Growth at 3.3 percent per year would raise the NSA index of manufacturing output (SIC, Standard Industrial Classification) from 108.2987 in Dec 2007 to 162.5089 in Jun 2020. The actual index NSA in Jun 2020 is 95.0970, which is 41.5 percent below trend. Manufacturing output grew at average 1.6 percent between Dec 1986 and Jun 2020. Using trend growth of 1.6 percent per year, the index would increase to 132.0671 in Jun 2020. The output of manufacturing at 95.0970 in Jun 2020 is 28.0 percent below trend under this alternative calculation. Using the NAICS (North American Industry Classification System), manufacturing output fell from the high of 110.5147 in Jun 2007 to the low of 86.3800 in Apr 2009 or 21.8 percent. The NAICS manufacturing index increased from 86.3800 in Apr 2009 to 96.1857 in Jun 2020 or 11.4 percent. The NAICS manufacturing index increased at the annual equivalent rate of 3.5 percent from Dec 1986 to Dec 2006. Growth at 3.5 percent would increase the NAICS manufacturing output index from 106.6777 in Dec 2007 to 163.9940 in Jun 2020. The NAICS index at 96.1857 in Jun 2020 is 41.3 below trend. The NAICS manufacturing output index grew at 1.7 percent annual equivalent from Dec 1999 to Dec 2006. Growth at 1.7 percent would raise the NAICS manufacturing output index from 106.6777 in Dec 2007 to 131.6999 in Jun 2020. The NAICS index at 96.1857 in Jun 2020 is 27.0 percent below trend under this alternative calculation.

Table I-6 shows that the contraction concentrated in two quarters: decline of 2.2 percent in IVQ2008 relative to the prior quarter and decline of 1.1 percent in IQ2009 relative to IVQ2008. The combined fall of GDP in IVQ2008 and IQ2009 was 3.3 percent {[(1-0.022) x (1-0.011) -1]100 = -3.3%}, or {[(IQ2009 $15,155.9)/(IIIQ2008 $15,677.0) – 1]100 = -3.3%} except for rounding. Those two quarters coincided with the worst effects of the financial crisis (Cochrane and Zingales 2009). GDP fell 0.1 percent in IIQ2009 but grew 0.4 percent in IIIQ2009, which is the beginning of recovery in the cyclical dates of the NBER. Most of the recovery occurred in five successive quarters from IVQ2009 to IVQ2010 of growth of 1.1 percent in IVQ2009, 0.4 percent in IQ2010, 0.9 percent in IIQ2010 and nearly equal growth at 0.7 percent in IIIQ2010 and 0.5 percent in IVQ2010 for cumulative growth in those five quarters of 3.8 percent, obtained by accumulating the quarterly rates {[(1.011 x 1.004 x 1.009 x 1.007 x 1.005) – 1]100 = 3.7%} or {[(IVQ2010 $15,750.6)/(IIIQ2009 $15,189.2) – 1]100 = 3.7%} with minor rounding difference. The economy then stalled during the first half of 2011 with decline of 0.2 percent in IQ2011 and growth of 0.7 percent in IIQ2011 for combined annual equivalent rate of 1.0 percent {(0.998 x 1.007)²}. The economy grew 0.0 percent in IIIQ2011 for annual equivalent growth of 0.0 percent in the first three quarters {[(0.998 x 1.007 x 1.00)^4/3 -1]100 = 0.7%}. Growth picked up in IVQ2011 with 1.2 percent relative to IIIQ2011. Growth in a quarter relative to a year earlier in Table I-6 slows from over 2.6 percent during three consecutive quarters from IIQ2010 to IVQ2010 to 1.9 percent in IQ2011, 1.7 percent in IIQ2011, 0.9 percent in IIIQ2011 and 1.6 percent in IVQ2011. As shown below, growth of 1.2 percent in IVQ2011 was partly driven by inventory accumulation. In IQ2012, GDP grew 0.8 percent relative to IVQ2011 and 2.7 percent relative to IQ2011, decelerating to 0.4 percent in IIQ2012 and 2.4 percent relative to IIQ2011 and 0.1 percent in IIIQ2012 and 2.5 percent relative to IIIQ2011. Growth was 0.1 percent in IVQ2012 with 1.5 percent relative to a year earlier but mostly because of deduction of 1.70 percentage points of inventory divestment and 0.63 percentage points of reduction of one-time national defense expenditures. Growth was 0.9 percent in IQ2013 and 1.6 percent relative to IQ2012 in large part because of burning savings to consume caused by financial repression of zero interest rates. There is similar growth of 0.1 percent in IIQ2013 and 1.3 percent relative to a year earlier. In IIIQ2013, GDP grew 0.8 percent relative to the prior quarter and 1.9 percent relative to the same quarter a year earlier with inventory accumulation contributing 1.48 percentage points to growth at 3.2 percent SAAR in IIIQ2013. GDP increased 0.8 percent in IVQ2013 and 2.6 percent relative to a year earlier. GDP fell 0.3 percent in IQ2014 and grew 1.4 percent relative to a year earlier. Inventory divestment deducted 1.40 percentage points from GDP growth in IQ2014. GDP grew 1.4 percent in IIQ2014, 2.7 percent relative to a year earlier and at 5.5 SAAR with inventory change contributing 1.05 percentage points. GDP grew 1.2 percent in IIIQ2014 and 3.1 percent relative to a year earlier. GDP grew 0.6 percent in IVQ2014 and 2.9 percent relative to a year earlier. GDP increased 0.9 percent in IQ2015 and increased 4.1 percent relative to a year earlier partly because of low level during contraction of 0.3 percent in IQ2014. GDP grew 0.7 percent in IIQ2015 and 3.4 percent relative to a year earlier. GDP grew 0.4 percent in IIIQ2015 and 2.6 percent relative to a year earlier. GDP increased 0.2 percent in IVQ2015 and increased 2.2 percent relative to a year earlier. GDP grew 0.6 percent in IQ2016 and increased 1.8 percent relative to a year earlier. GDP grew 0.3 percent in IIQ2016 and increased 1.4 percent relative to a year earlier. GDP grew 0.5 percent in IIIQ2016 and increased 1.6 percent relative to a year earlier. GDP grew 0.6 percent in IVQ2016 and increased 2.1 percent relative to a year earlier. GDP grew 0.6 percent in IQ2017 and increased 2.1 percent relative to a year earlier. GDP grew 0.4 percent in IIQ2017 and 2.2

 percent relative to a year earlier. GDP increased 0.7 percent in IIIQ2017 and increased 2.4 percent relative to a year earlier. GDP grew 1.0 percent in IVQ2017 and 2.7 percent relative to a year earlier. GDP increased 0.9 percent in IQ2018 and increased 3.1 percent relative to a year earlier. GDP grew 0.7 percent in IIQ2018 and increased 3.3 percent relative to a year earlier. GDP increased 0.5 percent in IIIQ2018 and increased 3.1 percent relative to a year earlier. GDP grew 0.3 percent in IVQ2018 and increased 2.5 percent relative to a year earlier. GDP grew 0.7 percent in IQ2019 and increased 2.3 percent relative to a year earlier. GDP grew 0.4 percent in IIQ2019 and increased 2.0 percent relative to a year earlier. GDP grew 0.6 percent in IIIQ2019 and increased 2.1 percent relative to a year earlier. GDP grew 0.6 percent in IVQ2019 and increased 2.3 percent relative to a year earlier. GDP decreased 1.3 percent in IQ2020 and increased 0.3 percent relative to a year earlier. GDP decreased 9.5 percent in IIQ2020 and decreased 9.5 percent relative to a year earlier (See Table 6 at https://www.bea.gov/sites/default/files/2020-07/gdp2q20_adv.pdf and entire data in https://apps.bea.gov/iTable/index_nipa.cfm), in the global recession with output in the US reaching a high in Feb 2020 (https://www.nber.org/cycles.html), in the lockdown of economic activity in the COVID-19 event. Rates of a quarter relative to the prior quarter capture better deceleration of the economy than rates on a quarter relative to the same quarter a year earlier. The critical question for which there is not yet definitive solution is whether what lies ahead is continuing growth recession with the economy crawling and unemployment/underemployment at extremely high levels or another contraction or conventional recession. Forecasts of various sources continued to maintain high growth in 2011 without taking into consideration the continuous slowing of the economy in late 2010 and the first half of 2011. The sovereign debt crisis in the euro area and growth in China have been common sources of doubts on the rate and direction of economic growth in the US. There is weak internal demand in the US with almost recent higher growth of investment and spikes of consumption driven by burning saving because of financial repression in the form of low interest rates and bloated balance sheet of the Fed.

Table I-6, US, Real GDP and Percentage Change Relative to IVQ2007 and Prior Quarter, Billions Chained 2012 Dollars and ∆%

	Real GDP, Billions Chained 2012 Dollars	∆% Relative to IVQ2007	∆% Relative to Prior Quarter	∆% over Year Earlier
IVQ2007	15,762.0	NA	0.6	2.0
IQ2008	15,671.4	-0.6	-0.6	1.1
IIQ2008	15,752.3	-0.1	0.5	1.1
IIIQ2008	15,667.0	-0.6	-0.5	0.0
IVQ2008	15,328.0	-2.8	-2.2	-2.8
IQ2009	15,155.9	-3.8	-1.1	-3.3
IIQ2009	15,134.1	-4.0	-0.1	-3.9
IIIQ2009	15,189.2	-3.6	0.4	-3.0
IV2009	15,356.1	-2.6	1.1	0.2
IQ2010	15,415.1	-2.2	0.4	1.7
IIQ2010	15,557.3	-1.3	0.9	2.8
IIIQ2010	15,672.0	-0.6	0.7	3.2
IVQ2010	15,750.6	-0.1	0.5	2.6
IQ2011	15,712.8	-0.3	-0.2	1.9
IIQ2011	15,825.1	0.4	0.7	1.7
IIIQ2011	15,820.7	0.4	0.0	0.9
IVQ2011	16,004.1	1.5	1.2	1.6
IQ2012	16,129.5	2.3	0.8	2.7
IIQ2012	16,198.8	2.8	0.4	2.4
IIIQ2012	16,220.7	2.9	0.1	2.5
IVQ2012	16,239.1	3.0	0.1	1.5
IQ2013	16,383.0	3.9	0.9	1.6
IIQ2013	16,403.2	4.1	0.1	1.3
IIIQ2013	16,531.7	4.9	0.8	1.9
IVQ2013	16,663.6	5.7	0.8	2.6
IQ2014	16,616.5	5.4	-0.3	1.4
IIQ2014	16,841.5	6.8	1.4	2.7
IIIQ2014	17,047.1	8.2	1.2	3.1
IVQ2014	17,143.0	8.8	0.6	2.9
IQ2015	17,305.8	9.8	0.9	4.1
IIQ2015	17,422.8	10.5	0.7	3.4
IIIQ2015	17,486.0	10.9	0.4	2.6
IVQ2015	17,514.1	11.1	0.2	2.2
IQ2016	17,613.3	11.7	0.6	1.8
IIQ2016	17,668.2	12.1	0.3	1.4
IIIQ2016	17,764.4	12.7	0.5	1.6
IVQ2016	17,876.2	13.4	0.6	2.1
IQ2017	17,977.3	14.1	0.6	2.1
IIQ2017	18,054.1	14.5	0.4	2.2
IIIQ2017	18,185.6	15.4	0.7	2.4
IVQ2017	18,359.4	16.5	1.0	2.7
IQ2018	18,530.5	17.6	0.9	3.1
IIQ2018	18,654.4	18.4	0.7	3.3
IIIQ2018	18,752.4	19.0	0.5	3.1
IVQ2018	18,813.9	19.4	0.3	2.5
IQ2019	18,950.3	20.2	0.7	2.3
IIQ2019	19,020.6	20.7	0.4	2.0
IIIQ2019	19,141.7	21.4	0.6	2.1
IVQ2019	19,254.0	22.2	0.6	2.3
IQ2020	19,010.8	20.6	-1.3	0.3
IIQ2020	17,205.8	9.2	-9.5	-9.5

Source: US Bureau of Economic Analysis https://apps.bea.gov/iTable/index_nipa.cfm

 Aggregate demand, personal consumption expenditures (PCE) and gross private domestic investment (GDI) were much stronger during the expansion phase from IQ1983 to IIIQ1993 than from IIIQ2009 to IIQ2020, as shown in Table I-8. GDI provided the impulse of growth in 1983 and 1984, which has not been the case from 2009 to 2020. The investment decision in the US economy has been frustrated in the current cyclical expansion. Growth of GDP in IIIQ2013 at seasonally adjusted annual rate of 3.2 percent consisted of positive contribution of 1.10 percentage points of personal consumption expenditures (PCE) plus positive contribution of 2.60 percentage points of gross private domestic investment (GDI) of which 1.48 percentage points of inventory investment (∆PI), deduction of net exports (trade or exports less imports) of 0.14 percentage points and deduction of 0.40 percentage points of government consumption expenditures and gross investment (GOV) partly because of one-time deduction of national defense expenditures of 0.38 percentage points. Growth at 3.2 percent in IVQ2013 had strongest contributions of 2.31 percentage points of PCE and 1.23 percentage points of trade. Growth of GDP at minus 1.1 percent in IQ2014 is mostly contribution of 1.03 percentage points by PCE with deduction of 0.74 percentage points by GDI, inventory divestment of 1.40 percentage points and trade deducting 1.11 percentage points. Growth at 5.5 percent in IIQ2014 consists of contributions of 2.97 percentage points by PCE and 2.92 percentage points by GDI with 1.05 percentage points by inventory change. Trade deducted 0.46 percentage points and government added 0.10 percentage points. Growth at 5.0 percent in IIIQ2014 consists of contribution of 2.92 percentage points by PCE, 1.47 percentage points by GDI, 0.10 percentage points by trade and 0.49 percentage points by government of which 0.22 percentage points by national defense expenditures. Growth at 2.3 percent in IVQ2014 consists of contribution of 3.26 percentage points by PCE, contribution of 0.09 percentage points by GDI and deduction of 0.69 percentage points by inventory investment. Net trade deducted 1.05 percentage points while government deducted 0.04 percentage mostly because of deduction of 0.47 percentage points by national defense expenditure declining at 10.6 percent in IVQ2014. Growth of GDP at 3.8 percent in IQ2015 consisted mostly of contributions of 2.41 percentage points by personal consumption expenditures, 2.46 percentage points by gross domestic investment and 2.28 percentage points by inventory accumulation while trade deducted 1.38 percentage points and government contributed 0.37 percentage points. Growth at 2.7 percent in IIQ2015 consisted mostly of contributions of 2.15 percentage points by personal consumption expenditures, 0.23 percentage points by gross domestic investment, deduction of 0.25 percentage points by net trade and contribution of 0.60 percentage points by government consumption and expenditures. Growth at 1.5 percent in IIIQ2015 consisted mostly of contribution of personal consumption expenditures (PCE) of 2.24 percentage points with government adding 0.32 percentage points. Gross domestic investment (GDI) deducted 0.13 percentage points with deduction of inventory divestment of 0.69 percentage points while net trade deducted 0.97 percentage points. Growth at 0.6 percent in IVQ2015 consisted mostly of contribution of 1.44 percentage points by personal consumption expenditures (PCE). GDI deducted 0.83 percentage points while trade deducted 0.22 percentage points and inventory divestment deducted 0.64 percentage points.  Growth at 2.3 percent in IQ2016 consisted mostly of contribution of 2.08 percentage points by personal consumption expenditures (PCE). There were deductions of 0.39 percentage points by gross domestic investment (GDI) and 0.73 percentage points by inventory change. Net trade subtracted 0.05 percentage points and government added 0.66 percentage points. Growth at 1.3 percent in IIQ2016 consisted mostly of contribution of 1.73 percentage points by PCE with GDI deducting 0.58 percentage points. Inventory divestment deducted 0.83 percentage points. Growth at 2.2 percent in IIIQ2016 consisted mostly of contribution of 1.75 percentage points by PCE with GDI contributing 0.03 percentage points. Inventory investment deducted 0.50 percentage points and trade added 0.08 percentage points. Growth at 2.5 percent in IVQ2016 had positive contributions of 1.68 percentage points of PCE, 1.80 of GDI and 0.19 of GOV. Inventory investment added 1.35 percentage points and net trade deducted 1.13 percentage points. Growth at 2.3 percent in IQ2017 originated in contribution of 2.15 percentage points by PCE and deduction of 0.23 percentage points by GDI with contribution of 0.36 percentage points by net trade. GOV added 0.01 percentage points and inventory divestment subtracted 1.41 percentage points. Growth of GDP at 1.7 percent in IIQ217 originated in contributions of 1.23 percentage points by PCE, 0.61 percentage points by GDI, deduction of 0.39 percentage points by net trade and contribution of 0.34 percentage points by inventory investment. Government added 0.27 percentage points. Growth at 2.9 percent in IIIQ2017 consisted of positive contributions of 1.57 percentage points by PCE, 1.26 percentage points by GDI, 1.05 percentage points by inventory investment and 0.08 percentage points by net trade. GOV contributed 0.04 percentage points. Growth at 3.9 percent in IVQ2017 originated in positive contributions of 2.82 percentage points by PCE, 1.07 percentage points by GDI and 0.49 percentage points by GOV. Inventory divestment deducted 0.50 percentage points and net trade deducted 0.49 percentage points. Growth at 3.8 percent in IQ2018 originated in positive contributions of 1.40 percentage points by PCE, 1.83 percentage points by GDI and 0.26 percentage points by GOV. Inventory investment added 0.41 percentage points and net trade added 0.29 percentage points. Growth at 2.7 percent in IIQ2018 originated in positive contributions of 2.13 percentage points by PCE and 0.50 percentage points by GOV. Inventory divestment subtracted 0.94 percentage points and GDI deducted 0.19 percentage points. Net trade contributed 0.25 percentage points.  Growth at 2.1 percent in IIIQ2018 consisted of positive contributions of 1.79 percentage points of PCE, 1.58 percentage points of inventory change and 0.44 percentage points of GOV. GDI contributed 1.72 percentage points and net trade deducted 1.83 percentage points. Growth at 1.3 percent in IVQ2018 consisted of positive contributions of 1.05 percentage points of PCE, 0.23 percentage points of inventory change and deduction of 0.16 percentage points of GOV. GDI contributed 0.69 percentage points and net trade deducted 0.27 percentage points. Growth at 2.9 percent in IQ2019 consisted of positive contributions of 1.25 percentage points of PCE, 0.21 percentage points of inventory change and contribution of 0.43 percentage points of GOV. GDI contributed 0.71 percentage points and net trade contributed 0.55 percentage points. Growth at 1.5 percent in IIQ2019 consisted of contribution of 2.47 percentage points by PCE and 0.86 percentage points by government. GDI deducted 1.04 percentage points, inventory divestment deducted 0.97 percentage points and net trade deducted 0.79 percentage points. Growth at 2.6 percent in IIIQ2019 consisted of contribution of 1.83 percentage points by PCE and 0.37 percentage points by government. GDI contributed 0.34 percentage points, inventory divestment deducted 0.09 percentage points and net trade contributed 0.04 percentage points. Growth at 2.4 percent in IVQ2019 consisted of contribution of 1.07 percentage points by PCE and 0.42 percentage points by government. GDI deducted 0.64 percentage points and inventory divestment deducted 0.82 percentage points. Net trade contributed 1.52 percentage points. Contraction at minus 5.0 percent in IQ2020, in the global recession with output in the US reaching a high in Feb 2020 (https://www.nber.org/cycles.html), in the lockdown of economic activity in the COVID-19 event, consisted of deduction of 4.75 percentage points by PCE. GDI deducted 1.56 percentage points and inventory divestment deducted 1.34 percentage points. Net trade contributed 1.13 percentage points and government 0.22 percentage points. Contraction at minus 32.9 percent in IIQ2020, in the global recession with output in the US reaching a high in Feb 2020 (https://www.nber.org/cycles.html), in the lockdown of economic activity in the COVID-19 event, consisted of deduction of 25.05 percentage points by PCE. GDI deducted 9.36 percentage points and inventory divestment deducted 3.98 percentage points. Net trade contributed 0.68 percentage points and government 0.82 percentage points. The economy of the United States has lost the dynamic growth impulse of earlier cyclical expansions with mediocre growth resulting from consumption forced by one-time effects of financial repression, national defense expenditures and inventory accumulation.

Table I-8, US, Contributions to the Rate of Growth of GDP in Percentage Points

	GDP	PCE	GDI	∆ PI	Trade	GOV
2020
I	-5.0	-4.75	-1.56	-1.34	1.13	0.22
II	-32.9	-25.05	-9.36	-3.98	0.68	0.82
2019
I	2.9	1.25	0.71	0.21	0.55	0.43
II	1.5	2.47	-1.04	-0.97	-0.79	0.86
III	2.6	1.83	0.34	-0.09	0.04	0.37
IV	2.4	1.07	-0.64	-0.82	1.52	0.42
2018
I	3.8	1.40	1.83	0.41	0.29	0.26
II	2.7	2.13	-0.19	-0.94	0.25	0.50
III	2.1	1.79	1.72	1.58	-1.83	0.44
IV	1.3	1.05	0.69	0.23	-0.27	-0.16
2017
I	2.3	2.15	-0.23	-1.41	0.36	0.01
II	1.7	1.23	0.61	0.34	-0.39	0.27
III	2.9	1.57	1.26	1.05	0.08	0.04
IV	3.9	2.82	1.07	-0.50	-0.49	0.49
2016
I	2.3	2.08	-0.39	-0.73	-0.05	0.66
II	1.3	1.73	-0.58	-0.83	0.22	-0.11
III	2.2	1.75	0.03	-0.50	0.08	0.33
IV	2.5	1.68	1.80	1.35	-1.13	0.19
2015
I	3.8	2.41	2.46	2.28	-1.38	0.37
II	2.7	2.15	0.23	-0.35	-0.25	0.60
III	1.5	2.24	-0.13	-0.69	-0.97	0.32
IV	0.6	1.44	-0.83	-0.64	-0.22	0.26
2014
I	-1.1	1.03	-0.74	-1.40	-1.11	-0.31
II	5.5	2.97	2.92	1.05	-0.46	0.10
III	5.0	2.92	1.47	0.17	0.10	0.49
IV	2.3	3.26	0.09	-0.69	-1.05	-0.04
2013
I	3.6	1.44	2.43	1.33	0.40	-0.68
II	0.5	0.20	0.75	0.23	-0.33	-0.13
III	3.2	1.10	2.60	1.48	-0.14	-0.40
IV	3.2	2.31	0.27	-0.62	1.23	-0.58
2012
I	3.2	2.19	1.32	-0.59	0.00	-0.34
II	1.7	0.41	1.47	0.21	0.27	-0.41
III	0.5	0.45	0.29	0.20	-0.08	-0.12
IV	0.5	1.22	-0.58	-1.70	0.57	-0.76
2011
I	-1.0	1.17	-1.10	-1.02	-0.02	-1.01
II	2.9	0.62	2.36	1.03	0.45	-0.55
III	-0.1	1.07	0.19	-2.23	-0.21	-1.16
IV	4.7	0.52	4.60	3.06	-0.36	-0.04
2010
I	1.5	1.32	1.28	1.30	-0.72	-0.33
II	3.7	2.16	2.95	0.92	-1.67	0.30
III	3.0	1.90	2.60	2.28	-0.94	-0.57
IV	2.0	1.80	-0.17	-1.25	0.91	-0.52
2009
I	-4.4	-0.52	-7.21	-2.14	2.40	0.92
II	-0.6	-1.03	-3.15	-1.04	2.39	1.22
III	1.5	1.92	-0.08	-0.33	-0.61	0.23
IV	4.5	-0.39	4.76	4.44	-0.07	0.17
1982
I	-6.1	1.80	-7.33	-5.33	-0.49	-0.05
II	1.8	0.75	-0.05	2.27	0.81	0.34
III	-1.5	1.64	-0.62	1.11	-3.22	0.68
IV	0.2	4.34	-5.38	-5.34	-0.10	1.30
1983
I	5.4	2.52	2.34	0.91	-0.30	0.81
II	9.4	5.21	5.95	3.42	-2.47	0.73
III	8.2	4.60	4.40	0.57	-2.26	1.49
IV	8.6	4.10	6.95	3.01	-1.14	-1.30
1984
I	8.1	2.21	7.23	4.94	-2.31	0.92
II	7.1	3.57	2.57	-0.29	-0.87	1.82
III	3.9	1.88	1.70	0.21	-0.36	0.69
IV	3.3	3.22	-1.07	-2.43	-0.56	1.74
1985
I	3.9	4.22	-2.14	-2.86	0.94	0.92
II	3.6	2.29	1.34	0.35	-1.91	1.85
III	6.2	4.76	-0.43	-0.15	-0.01	1.93
IV	3.0	0.52	2.81	1.40	-0.67	0.35
1986
I	3.8	2.16	0.04	-0.17	0.93	0.66
II	1.8	2.70	-1.30	-1.30	-1.33	1.75
III	3.9	4.43	-1.97	-1.63	-0.45	1.87
IV	2.2	1.55	0.25	-0.29	0.71	-0.33
1987
I	3.0	0.26	1.99	3.29	0.23	0.54
II	4.4	3.47	0.08	-1.00	0.14	0.70
III	3.5	2.91	0.03	-1.20	0.45	0.13
IV	7.0	0.57	4.96	4.97	0.18	1.33
1988
I	2.1	4.45	-3.64	-3.69	1.94	-0.67
II	5.4	1.90	1.73	0.33	1.44	0.29
III	2.4	2.25	0.38	0.05	-0.31	0.03
IV	5.4	2.91	1.12	0.28	-0.21	1.62
1989
I	4.1	1.19	2.43	1.80	0.86	-0.34
II	3.1	1.19	-0.71	-0.80	1.35	1.26
III	3.0	2.46	-0.64	-1.84	0.44	0.75
IV	0.8	1.11	-0.54	0.37	-0.20	0.42
1990
I	4.4	2.17	0.70	-0.10	0.25	1.33
II	1.5	0.77	0.03	1.38	0.52	0.13
III	0.3	1.00	-1.29	-0.74	0.44	0.13
IV	-3.6	-1.96	-3.66	-1.97	1.47	0.55
1991
I	-1.9	-1.00	-2.04	-0.26	0.69	0.49
II	3.2	2.11	0.05	-0.12	0.65	0.35
III	2.0	1.27	1.21	1.16	-0.21	-0.23
IV	1.4	-0.12	2.15	1.91	-0.02	-0.61
1992
I	4.9	4.83	-1.16	-1.81	0.44	0.77
II	4.4	1.78	3.40	1.44	-0.63	-0.14
III	4.0	2.77	0.50	-0.19	0.19	0.55
IV	4.2	3.08	1.92	0.14	-0.77	0.01
1993
I	0.7	0.98	1.49	1.04	-0.79	-1.01
II	2.3	2.35	0.39	-0.72	-0.40	0.01
III	1.9	2.88	-0.42	-1.38	-0.66	0.11
IV	5.6	2.31	3.40	0.87	0.45	0.29

Note: PCE: personal consumption expenditures; GDI: gross private domestic investment; ∆ PI: change in private inventories; Trade: net exports of goods and services; GOV: government consumption expenditures and gross investment; – is negative and no sign positive

GDP: percent change at annual rate; percentage points at annual rates

Source: US Bureau of Economic Analysis

Source: Bureau of Economic Analysis https://apps.bea.gov/iTable/index_nipa.cfm

 The Bureau of Economic Analysis (BEA) (pages 1-2) explains growth of GDP in IIQ2020 as follows (https://www.bea.gov/sites/default/files/2020-07/gdp2q20_adv.pdf):

“Real gross domestic product (GDP) decreased at an annual rate of 32.9 percent in the second quarter of 2020 (table 1), according to the "advance" estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP decreased 5.0 percent.

The GDP estimate released today is based on source data that are incomplete or subject to further

revision by the source agency (see “Source Data for the Advance Estimate” on page 2). The "second" estimate for the second quarter, based on more complete data, will be released on August 27, 2020. The decrease in real GDP reflected decreases in personal consumption expenditures (PCE), exports, private inventory investment, nonresidential fixed investment, residential fixed investment, and state and local government spending that were partly offset by an increase in federal government spending. Imports, which are a subtraction in the calculation of GDP, decreased (table 2).

The decrease in PCE reflected decreases in services (led by health care) and goods (led by clothing and footwear). The decrease in exports primarily reflected a decrease in goods (led by capital goods). The decrease in private inventory investment primarily reflected a decrease in retail (led by motor vehicle dealers). The decrease in nonresidential fixed investment primarily reflected a decrease in equipment (led by transportation equipment), while the decrease in residential investment primarily reflected a decrease in new single-family housing.”

There are positive contributions to growth in IIQ2020 shown in Table I-9:

·       Growth of national defense expenditures at 4.1 percent

·       Growth of government expenditures (GOV) at 2.7 percent

·       Growth of federal government expenditures (Federal GOV) at 17.4 percent

·       Contraction of imports, which are a deduction from growth, at 53.4 percent

There were negative contributions in IIQ2020:

·       Personal consumptions expenditures (PCE) contracting at 34.6 percent

·       Durable goods contracting at 1.4 percent

·       Nonresidential fixed investment contracting at 27.0 percent

·       Residential fixed investment contracting at 38.7 percent

·       Exports contracting at 64.1 percent

·       Inventory divestment subtracting 3.98 percentage points

The BEA finding accelerating factors:

• Contraction of imports, which are a deduction from growth, at 53.4 percent after contracting at 15.0 percent in IQ2020
• Durable goods contracting at 1.4 percent after contracting at 12.5 percent in IQ2020
• Government expending at 2.7 percent after growing at 1.3 percent in IQ2020
• Federal government increasing at 17.4 percent after increasing at 1.6 percent in IQ2020

The BEA finds offsetting decelerating factors:

·       Personal consumption expenditure PCE contracting at 34.6 percent after contracting at 6.9 percent in IQ2020

·       Nonresidential fixed investment (NRFI) contracting at 27.0 percent after contracting a 6.7 percent in IQ2020

·       Exports contracting at 64.1 percent after contracting at 9.5 percent in IQ2020

·       State and local government expenditures contracting at 5.6 percent after growing at 1.1 percent in IQ2020

• Inventory divestment subtracting 3.98 percentage points after subtracting 1.34 percentage points in IQ2020

An important aspect of growth in the US is the decline in growth of real disposable personal income, or what is left after taxes and inflation, which decreased at the rate of 0.2 percent in IIIQ2013 compared with a year earlier. Contraction of real disposable income of 2.5 percent in IVQ2013 relative to a year earlier is largely due to comparison with an artificially higher level in anticipations of income in Nov and Dec 2012 to avoid increases in taxes in 2013, an episode known as “fiscal cliff.”  Real disposable personal income increased 3.1 percent in IQ2014 relative to a year earlier and 3.6 percent in IIQ2014 relative to a year earlier. Real disposable personal income increased 4.3 percent in IIIQ2014 relative to a year earlier and 5.2 percent in IVQ2014 compared with a year earlier. Real disposable personal income grew 4.9 percent in IQ2015 relative to a year earlier partly because of contraction of energy prices and increased at 4.4 percent in IIQ2015. Real disposable personal income grew at 4.0 percent in IIIQ2015 relative to a year earlier and at 3.0 percent in IVQ2015 relative to a year earlier. Real disposable income grew at 2.5 percent in IQ2016 relative to a year earlier and at 1.6 percent in IIQ2016 relative to a year earlier. Real disposable income grew at 1.8 percent in IIIQ2016 relative to a year earlier and at 1.8 percent in IVQ2016 compared with a year earlier. Real disposable income grew at 2.1 percent in IQ2017 relative to a year earlier and grew at 3.3 percent in IIQ2017 relative to a year earlier. Real disposable income grew at 3.5 percent in IIIQ2017 relative to a year earlier and grew 3.4 percent in IVQ2017 relative to a year earlier. Real disposable income grew at 3.6 percent in IQ2018 relative to a year earlier and grew at 3.4 percent in IIQ2018 relative to a year earlier. Real disposable personal income grew at 3.6 percent in IIIQ2018 relative to a year earlier and at 3.7 percent in IVQ2018 relative to a year earlier. Real disposable income grew at 3.2 percent in IQ2019 relative to a year earlier and grew at 2.1 percent in IIQ2019 relative to a year earlier. Real disposable income grew at 1.8 percent in IIIQ2019 relative to a year earlier. Real disposable income grew at 1.6 percent in IVQ2019 relative to a year earlier. Real disposable income grew at 1.4 percent in IQ2020 relative to a year earlier. Real disposable personal income grew at 11.5 percent in IIQ2020 relative to a year earlier. The effects of financial repression, or zero interest, are vividly shown in the decline of the savings rate, or personal saving as percent of disposable income from 10.2 percent in IVQ2012 to 6.6 percent in IIIQ2013 and 6.3 percent in IVQ2013. The savings rate eased to 7.3 percent in IQ2014, increasing to 7.4 percent in IIQ2014 and stabilizing to 7.4 percent in IIIQ2014. The savings rate moved to 7.4 percent in IVQ2014, increasing to 7.7 percent in IQ2015. The savings rate moved to 7.6 percent in IIQ2015, 7.7 percent in IIIQ2015 and 7.4 percent in IVQ2015. The savings ratio moved to 7.5 percent in IQ2016 and 6.6 percent in IIQ2016. The savings ratio eased at 6.3 percent in IIIQ2016 and at 6.4 percent in IVQ2016. The savings ratio reached 7.0 percent in IQ2017 and 6.7 percent in IIQ2017. The savings ratio eased to 6.7 percent in IIIQ2017 and 6.3 percent in IVQ2017. The savings ratio increased to 7.2 percent in IQ2018 and 7.6 percent in IIQ2018. The savings ratio eased to 7.5 percent in IIIQ2018 and increased to 7.8 percent in IVQ2018. The savings ratio increased to 8.5 percent in IQ2019, easing to 7.3 percent in IIQ2019. The savings ratio eased to 7.2 percent in IIIQ2019, stabilizing to 7.3 percent in IVQ2019. The savings ratio increased to 9.5 percent in IQ2020. The savings ratio increased to 25.7 percent in IIQ2020. Anticipation of income in IVQ2012 to avoid higher taxes in 2013 caused increases in income and savings while higher payroll taxes in 2013 restricted income growth and savings in IQ2013. Zero interest rates induce risky investments with high leverage and can contract balance sheets of families, business and financial institutions when interest rates inevitably increase in the future. There is a tradeoff of weaker economy in the future when interest rates increase by meager growth in the present with forced consumption by zero interest rates. Microeconomics consists of the analysis of allocation of scarce resources to alternative and competing ends. Zero interest rates cloud he calculus of risk and returns in consumption and investment, disrupting decisions that maintain the economy in its long-term growth path.

Table I-9, US, Percentage Seasonally Adjusted Annual Equivalent Quarterly Rates of Increase, %

	II Q2019	III Q2019	IV Q2019	IQ 2020	II Q2020
GDP	1.5	2.6	2.4	-5.0	-32.9
PCE	3.7	2.7	1.6	-6.9	-34.6
Durable Goods	12.7	6.3	3.1	-12.5	-1.4
NRFI	0.0	1.9	-0.3	-6.7	-27.0
RFI	-2.1	4.6	5.8	19.0	-38.7
Net Exports GS % Points	-0.79	0.04	1.52	1.13	0.68
Exports	-4.5	0.8	3.4	-9.5	-64.1
Imports	1.7	0.5	-7.5	-15.0	-53.4
GOV	5.0	2.1	2.4	1.3	2.7
Federal GOV	9.2	4.8	4.0	1.6	17.4
National Defense	4.4	5.6	6.6	-0.3	4.1
GDP Growth % Points	0.17	0.22	0.26	-0.01	0.20
State/Local GOV	2.6	0.6	1.5	1.1	-5.6
∆ PI % Points	-0.97	-0.09	-0.82	-1.34	-3.98
Final Sales of Domestic Product	2.5	2.7	3.2	-3.6	-29.3
Gross Domestic Purchases	2.2	2.5	0.8	-5.9	-31.8
Prices Gross Domestic Purchases	2.2	1.3	1.3	1.4	-1.5
Prices of GDP	2.5	1.5	1.4	1.4	-1.8
Prices of GDP Excluding Food and Energy	2.4	1.7	1.3	1.7	-1.4
Prices of PCE	2.5	1.4	1.5	1.3	-1.9
Prices of PCE Excluding Food and Energy	2.1	1.9	1.3	1.6	-1.1
Prices of Market Based PCE	2.1	1.1	1.5	1.3	-1.2
Prices of Market Based PCE Excluding Food and Energy	1.6	1.6	1.3	1.7	-0.1
Real Disposable Personal Income*	2.1	1.8	1.6	1.4	11.5
Personal Saving As % Disposable Income	7.3	7.2	7.3	9.5	25.7

Note: PCE: personal consumption expenditures; NRFI: nonresidential fixed investment; RFI: residential fixed investment; GOV: government consumption expenditures and gross investment; ∆ PI: change in

private inventories; GDP - ∆ PI: final sales of domestic product; PP: percentage points; Personal savings rate: savings as percent of disposable income

*Percent change from quarter one year ago

Source: Bureau of Economic Analysis

https://apps.bea.gov/iTable/index_nipa.cfm

Percentage shares of GDP are in Table I-10. PCE (personal consumption expenditures) is equivalent to 67.1 percent of GDP and is under pressure with stagnant real disposable income per person, elevated levels of unemployment and underemployment and higher savings rates than before the global recession, temporarily interrupted by financial repression in the form of zero interest rates. There is even stronger pressure in the global recession with output in the US reaching a high in Feb 2020 (https://www.nber.org/cycles.html), in the lockdown of economic activity in the COVID-19 event. Gross private domestic investment is also growing slowly even with about two trillion dollars in cash holdings by companies. In a slowing world economy, it may prove more difficult to grow exports faster than imports to generate higher growth. Bouts of risk aversion revalue the dollar relative to most currencies in the world as investors increase their holdings of dollar-denominated assets.

Table I-10, US, Percentage Shares of GDP, %

	IIQ2020
GDP	100.0
PCE	67.1
Goods	22.4
Durable	7.6
Nondurable	14.8
Services	44.7
Gross Private Domestic Investment	16.0
Fixed Investment	17.6
NRFI	13.6
Structures	3.0
Equipment & Software	5.4
Intellectual Property	5.2
RFI	4.0
Change in Private       Inventories	-1.7
Net Exports of Goods and Services	-2.8
Exports	9.3
Goods	5.8
Services	3.4
Imports	12.1
Goods	10.0
Services	2.1
Government	19.8
Federal	7.8
National Defense	4.5
Nondefense	3.3
State and Local	12.0

PCE: personal consumption expenditures; NRFI: nonresidential fixed investment; RFI: residential fixed investment

Source: US Bureau of Economic Analysis https://apps.bea.gov/iTable/index_nipa.cfm

Table I-11 shows percentage point (PP) contributions to the annual levels of GDP growth in the earlier recessions 1958-1959, 1975-1976, 1982-1993 and 2009, 2010, 2011, 2012, 2013, 2014 2015, 2016, 2017, 2018 and 2019. The data incorporate the new revisions released by the BEA. The most striking contrast is in the rates of growth of annual GDP in the expansion phases of 6.9 percent in 1959, 5.4 percent in 1976, and 4.6 percent in 1983 followed by 7.2 percent in 1984 and 4.2 percent in 1985. The National Bureau of Economic Research (NBER) dates a contraction of the US from IQ1990 (Jul) to IQ1991 (Mar) (https://www.nber.org/cycles.html). The expansion lasted until another contraction beginning in IQ2001 (Mar). US GDP contracted 1.3 percent from the pre-recession peak of $8983.9 billion of chained 2009 dollars in IIIQ1990 to the trough of $8865.6 billion in IQ1991 (https://apps.bea.gov/iTable/index_nipa.cfm). In contrast, GDP grew 2.6 percent in 2010 after six consecutive quarters of growth, 1.6 percent in 2011 after ten consecutive quarters of expansion, 2.2 percent in 2012 after 14 quarters of expansion, 1.8 percent in 2013 after 18 consecutive quarters of expansion, 2.5 percent in 2014 after 22 consecutive quarters of expansion and 3.1 percent in 2015 after twenty-six consecutive quarters of expansion. GDP grew at 1.7 percent in 2016 after thirty consecutive quarters of expansion. GDP grew at 2.3 percent in 2017 after 34 quarters of expansion. GDP grew at 3.0 percent in 2018 after 38 quarters of expansion. GDP grew at 2.2 percent in 2019 after 42 quarters of expansion. Annual levels also show much stronger growth of PCEs in the expansions after the earlier contractions than in the expansion after the global recession of 2007. Gross domestic investment was much stronger in the earlier expansions than in 2010, 2011, 2012, 2013, 2014, 2015, 2016, 2017, 2018 and 2019.

Table I-11, US, Percentage Point Contributions to the Annual Growth Rate of GDP

	GDP	PCE	GDI	∆ PI	Trade	GOV
1958	-0.7	0.52	-1.16	-0.17	-0.87	0.76
1959	6.9	3.51	2.83	0.83	0.00	0.60
1975	-0.2	1.36	-2.91	-1.24	0.86	0.49
1976	5.4	3.41	2.91	1.37	-1.05	0.12
1982	-1.8	0.88	-2.46	-1.31	-0.59	0.37
1983	4.6	3.51	1.60	0.28	-1.32	0.79
1984	7.2	3.30	4.73	1.90	-1.54	0.74
1985	4.2	3.20	-0.01	-1.03	-0.39	1.37
1986	3.5	2.58	0.03	-0.31	-0.29	1.14
1987	3.5	2.15	0.53	0.41	0.17	0.62
1988	4.2	2.65	0.45	-0.13	0.81	0.26
1989	3.7	1.86	0.72	0.17	0.51	0.58
1990	1.9	1.28	-0.45	-0.21	0.40	0.65
1991	-0.1	0.12	-1.09	-0.26	0.62	0.25
1992	3.5	2.36	1.11	0.28	-0.04	0.10
1993	2.8	2.24	1.24	0.07	-0.56	-0.17
2009	-2.5	-0.85	-3.52	-0.83	1.13	0.70
2010	2.6	1.20	1.86	1.42	-0.49	0.00
2011	1.6	1.29	0.94	-0.05	-0.01	-0.66
2012	2.2	1.03	1.64	0.17	0.00	-0.42
2013	1.8	0.99	1.11	0.23	0.22	-0.47
2014	2.5	1.99	0.95	-0.12	-0.25	-0.17
2015	3.1	2.55	0.95	0.31	-0.76	0.33
2016	1.7	1.87	-0.27	-0.57	-0.21	0.32
2017	2.3	1.79	0.60	-0.04	-0.22	0.16
2018	3.0	1.85	1.08	0.20	-0.25	0.32
2019	2.2	1.64	0.30	-0.02	-0.18	0.40

Source: US Bureau of Economic Analysis https://apps.bea.gov/iTable/index_nipa.cfm

Table I-12 provides more detail of the contributions to growth of GDP from 2009 to 2019 using annual-level data. PCEs contributed 1.20 PPs to GDP growth in 2010 of which 0.66 percentage points (PP) in goods and 0.57 PP in services. Gross private domestic investment (GPDI) deducted 3.52 PPs of GDP growth in 2009 of which -2.70 PPs by fixed investment and -0.83 PPs of inventory change (∆PI) and added 1.86 PPs of GDI in 2010 of which 0.44 PPs of fixed investment and 1.42 PPs of inventory accumulation (∆PI). Trade, or exports of goods and services net of imports, contributed 1.13 PPs in 2009 of which exports deducted 1.01 PPs and imports added 2.14 PPs. In 2010, trade deducted 0.49 PPs with exports contributing 1.35 PPs and imports deducting 1.84 PPs likely benefitting from dollar revaluation. In 2009, government added 0.70 PP of which 0.47 PPs by the federal government and 0.20 PPs by state and local government; in 2010, government added 0.02 PPs of which 0.37 PPs by the federal government with state and local government deducting 0.23 PPs. Table I-12 provides the estimates for 2011, 2012, 2013, 2014, 2015, 2016 and 2017. PCE contributed 1.29 PPs in 2011 after 1.20 PPs in 2010. The contribution of PCE fell to 1.03 points in 2012 and to 0.99 PPs in 2013, increasing to 1.99 PPs in 2014. PCE contributed 2.48 percentage points in 2015 and added 1.85 PPs in 2016. PCE contributed 1.78 percentage points in 2017. PCE contributed 2.05 PPs in 2018. PCE added 1.76 PPs in 2019. The breakdown into goods and services is similar but with contributions in 2012 of 0.48 PPs of goods and 0.55 PPs of services. In 2013, goods contributed 0.70 PPs and services 0.29 PPs. Goods contributed 0.90 PPs in 2014 and services contributed 1.10 PPs. Goods contributed 1.03 percentage points in 2015 and services 1.53 percentage points. Goods contributed 0.77 PPs in 2016 and services contributed 1.10 PPs. Goods contributed 0.86 PPs in 2017 and services contributed 0.93 PPs. Goods contributed 0.86 PPs in 2018 and services contributed 0.98 PPs. Goods contributed 0.78 PPs in 2019 and services contributed 0.86 PPs. Gross private domestic investment contributed 1.86 PPs in 2010 with 1.42 PPs of change of private inventories but the contribution of gross private domestic investment was only 0.94 PPs in 2011. The contribution of GDI in 2012 increased to 1.64 PPs with fixed investment increasing its contribution to 1.47 PPs and residential investment contributing 0.31 PPs for the first time since 2009. GDI contributed 1.64 PPs in 2012 with 1.47 PPs from fixed investment and 0.17 PPs from inventory change. GDI contributed 1.11 PPs in 2013, 0.95 PPs in 2014 and 0.95 PPs in 2015. GDI deducted 0.27 PPs in 2016 with contribution of 0.30 PPs of fixed investment and deduction of 0.57 PPs by inventory change. GDI contributed 0.60 PPs in 2017 with contribution of 0.64 PPs by fixed investment and 0.49 PPs by nonresidential fixed investment. GDI contributed 1.08 percentage points in 2018 with contribution of 0.88 percentage points by fixed investment and 0.91 percentage points by nonresidential fixed investment. GDI contributed 0.30 percentage points in 2019 with contributions of 0.32 percentage points by fixed investment and 0.39 percentage points by nonresidential fixed investment. Net exports of goods and services deducted marginally in 2011 with 0.01 PPs and added 0.00 PPs in 2012. Net trade contributed 0.22 PPs in 2013 and deducted 0.25 PPs in 2014. Net trade deducted 0.76 percentage points in 2015 and deducted 0.21 PPs in 2016. Net trade deducted 0.22 percentage points in 2017 and deducted 0.25 percentage points in 2018. Net trade deducted 0.18 percentage points in 2019. The contribution of exports fell from 1.35 PPs in 2010 and 0.90 PPs in 2011 to only 0.46 PPs in 2012, 0.48 PPs in 2013 and 0.57 PPs in 2014. Exports contributed only 0.06 percentage points in 2015 and 0.04 percentage points in 2016. Exports contributed 0.47 PPs in 2017 and contributed 0.36 percentage points in 2018. Exports deducted 0.01 percentage points in 2019. Government deducted 0.66 PPs in 2011, 0.42 PPs in 2012 and 0.47 PPs in 2013. Government deducted 0.17 PPs in 2014 and contributed 0.33 PPs in 2015, contributing 0.32 PPs in 2016. Government contributed 0.16 PPs in 2017 and contributed 0.32 PP in 2018. Government contributed 0.40 PP in 2019. Demand weakened in 2013 with lower contribution of personal consumption expenditures of 0.99 PPs and of gross domestic investment of 1.11 PPs.  PCE contributed 1.99 PPs in 2014 and GDI 0.95 PPs. PCE contributed 2.55 PPs in 2015 and GDI contributed 0.95 PPs. PCE contributed 1.87 PPs in 2016 and GDI deducted 0.27 PPs. PCE contributed 1.79 PPs in 2017 and GDI added 0.60 PPs. PCE contributed 1.85 PP in 2018 and GDI added 1.08 PPs. PCE contributed 1.64 PPs in 2019 and GDI added 0.30 PPs. Net trade contributed only 0.22 PPs in 2013 and deducted 0.25 PPs in 2014, deducting 0.76 PPs in 2015. Net trade deducted 0.21 PPs in 2016 and deducted 0.22 PPs in 2017. Net trade deducted 0.25 PPs in 2018. Net trade deducted 0.18 PPs in 2019. The expansion since IIIQ2009 has been characterized by weak contributions of aggregate demand, which is the sum of personal consumption expenditures plus gross private domestic investment. The US did not recover strongly from the global recessions as typical in past cyclical expansions. Recoveries tend to be more sluggish as expansions mature. At the margin in IVQ2011, the acceleration of expansion was driven by inventory accumulation instead of aggregate demand of consumption and investment. Growth of PCE was partly the result of burning savings because of financial repression, which may not be sustainable in the future while creating multiple distortions of resource allocation and growth restraint.

Table I-12, US, Contributions to Growth of Gross Domestic Product in Percentage Points

	2009	2010	2011	2012	2013	2014	2015
GDP Growth ∆%	-2.5	2.6	1.6	2.2	1.8	2.5	3.1
Personal Consumption Expenditures (PCE)	-0.85	1.20	1.29	1.03	0.99	1.99	2.55
Goods	-0.70	0.62	0.49	0.48	0.70	0.90	1.03
Durable	-0.45	0.39	0.35	0.41	0.42	0.50	0.53
Nondurable	-0.25	0.24	0.14	0.07	0.28	0.40	0.50
Services	-0.15	0.57	0.80	0.55	0.29	1.10	1.53
Gross Private Domestic Investment (GPDI)	-3.52	1.86	0.94	1.64	1.11	0.95	0.95
Fixed Investment	-2.70	0.44	0.99	1.47	0.87	1.07	0.65
Nonresidential	-1.95	0.52	1.00	1.16	0.54	0.95	0.32
Structures	-0.72	-0.50	0.07	0.34	0.04	0.33	-0.03
Equipment, software	-1.22	0.92	0.69	0.62	0.28	0.42	0.19
Intellectual Property	-0.02	0.11	0.24	0.20	0.22	0.20	0.16
Residential	-0.74	-0.08	0.00	0.31	0.34	0.12	0.33
Change Private Inventories	-0.83	1.42	-0.05	0.17	0.23	-0.12	0.31
Net Exports of Goods and Services	1.13	-0.49	-0.01	0.00	0.22	-0.25	-0.76
Exports	-1.01	1.35	0.90	0.46	0.48	0.57	0.06
Goods	-1.00	1.12	0.61	0.36	0.30	0.42	-0.03
Services	-0.01	0.23	0.28	0.10	0.18	0.14	0.09
Imports	2.14	-1.84	-0.91	-0.46	-0.26	-0.81	-0.81
Goods	2.08	-1.74	-0.82	-0.38	-0.25	-0.75	-0.73
Services	0.06	-0.10	-0.09	-0.09	-0.01	-0.06	-0.08
Government Consumption Expenditures and Gross Investment	0.70	0.00	-0.66	-0.42	-0.47	-0.17	0.33
Federal	0.47	0.35	-0.23	-0.16	-0.44	-0.19	0.00
National Defense	0.29	0.16	-0.12	-0.18	-0.34	-0.19	-0.09
Nondefense	0.18	0.19	-0.11	0.03	-0.10	0.00	0.09
State and Local	0.23	-0.35	-0.44	-0.26	-0.03	0.02	0.33

	2014	2015	2016	2017	2018	2019
GDP Growth ∆%	2.5	3.1	1.7	2.3	3.0	2.2
Personal Consumption Expenditures (PCE)	1.99	2.55	1.87	1.79	1.85	1.64
Goods	0.90	1.03	0.77	0.86	0.86	0.78
Durable	0.50	0.53	0.41	0.49	0.48	0.34
Nondurable	0.40	0.50	0.36	0.37	0.38	0.44
Services	1.10	1.53	1.10	0.93	0.98	0.86
Gross Private Domestic Investment (GPDI)	0.95	0.95	-0.27	0.60	1.08	0.30
Fixed Investment	1.07	0.65	0.30	0.64	0.88	0.32
Nonresidential	0.95	0.32	0.07	0.49	0.91	0.39
Structures	0.33	-0.03	-0.14	0.12	0.11	-0.02
Equipment, software	0.42	0.19	-0.10	0.18	0.45	0.12
Intellectual Property	0.20	0.16	0.32	0.18	0.34	0.29
Residential	0.12	0.33	0.23	0.15	-0.02	-0.07
Change Private Inventories	-0.12	0.31	-0.57	-0.04	0.20	-0.02
Net Exports of Goods and Services	-0.25	-0.76	-0.21	-0.22	-0.25	-0.18
Exports	0.57	0.06	0.04	0.47	0.36	-0.01
Goods	0.42	-0.03	0.04	0.31	0.33	-0.01
Services	0.14	0.09	-0.01	0.15	0.03	-0.01
Imports	-0.81	-0.81	-0.25	-0.68	-0.62	-0.16
Goods	-0.75	-0.73	-0.17	-0.56	-0.60	-0.06
Services	-0.06	-0.08	-0.08	-0.12	-0.01	-0.10
Government Consumption Expenditures and Gross Investment	-0.17	0.33	0.32	0.16	0.32	0.40
Federal	-0.19	0.00	0.04	0.02	0.18	0.26
National Defense	-0.19	-0.09	-0.02	0.03	0.13	0.21
Nondefense	0.00	0.09	0.06	-0.01	0.06	0.05
State and Local	0.02	0.33	0.28	0.14	0.13	0.14

Source: US Bureau of Economic Analysis

https://apps.bea.gov/iTable/index_nipa.cfm

Industrial production increased 1.4 percent in May 2020 and decreased 12.5 percent in Apr 2020 after decreasing 4.6 percent in Mar 2020, with all data seasonally adjusted. The Board of Governors of the Federal Reserve System conducted the annual revision of industrial production released on Mar 27, 2019 (https://www.federalreserve.gov/releases/g17/revisions/Current/DefaultRev.htm):

“The Federal Reserve has revised its index of industrial production (IP) and the related measures of capacity and capacity utilization.[1] On net, the revisions to the growth rates for total IP for recent years were small and positive, with the estimates for 2016 and 2017 a bit higher and the estimates for 2015 and 2018 slightly lower.[2] Total IP is still reported to have increased from the end of the recession in mid-2009 through late 2014 before declining in 2015 and rebounding in mid-2016. Subsequently, the index advanced around 7 1/2 percent over 2017 and 2018.

Capacity for total industry expanded modestly in each year from 2015 to 2017 before advancing 1 1/2 percent in 2018; it is expected to advance about 2 percent in 2019. Revisions for recent years were very small and showed slightly less expansion in most years relative to earlier reports.

In the fourth quarter of 2018, capacity utilization for total industry stood at 79.4 percent, about 3/4 percentage point above its previous estimate and about 1/2 percentage point below its long-run (1972–2018) average. The utilization rate in 2017 is also higher than its previous estimate.”

The report of the Board of Governors of the Federal Reserve System states (https://www.federalreserve.gov/releases/g17/current/default.htm):

“Total industrial production rose 5.4 percent in June after increasing 1.4 percent in May; even so, it remained 10.9 percent below its pre-pandemic February level. For the second quarter as a whole, the index fell 42.6 percent at an annual rate, its largest quarterly decrease since the industrial sector retrenched after World War II. Manufacturing output climbed 7.2 percent in June, as all major industries posted increases. The largest gain—105.0 percent—was registered by motor vehicles and parts, while factory production elsewhere rose 3.9 percent. Mining production fell 2.9 percent, and the output of utilities increased 4.2 percent. At 97.5 percent of its 2012 average, the level of total industrial production was 10.8 percent lower in June than it was a year earlier. Capacity utilization for the industrial sector increased 3.5 percentage points to 68.6 percent in June, a rate that is 11.2 percentage points below its long-run (1972–2019) average but 1.9 percentage points above its trough during the Great Recession.”  In the six months ending in Jun 2020, United States national industrial production accumulated change of minus 11.1 percent at the annual equivalent rate of minus 20.9 percent, which is lower than growth of minus 10.8 percent in the 12 months ending in Jun 2020. Excluding growth of 0.1 percent in Feb 2019, growth in the remaining five months from Jan 2019 to Jun 2020 accumulated to minus 11.2 percent or minus 24.7 percent annual equivalent. Industrial production increased 5.4 percent in one of the past six months, 1.4 percent in one month, 0.1 percent in one month, minus 12.7 percent in one month, minus 4.4 percent in one month and minus 0.4 in one month. Industrial production decreased at annual equivalent 24.2 percent in the most recent quarter from Apr 2020 to Jun 2020 and decreased at 17.5 percent annual equivalent in the prior quarter from Jan 2020 to Mar 2020. Business equipment accumulated change of minus 18.0 percent in the six months from Jan 2020 to Jun 2020, at the annual equivalent rate of minus 32.7 percent, which is lower than growth of minus 18.2 percent in the 12 months ending in Jun 2020. The Fed analyzes capacity utilization of total industry in its report (https://www.federalreserve.gov/releases/g17/Current/default.htm): ”Capacity utilization for the industrial sector increased 3.5 percentage points to 68.6 percent in June, a rate that is 11.2 percentage points below its long-run (1972–2019) average but 1.9 percentage points above its trough during the Great Recession.”  United States industry apparently decelerated to a lower growth rate followed by possible acceleration, weakening growth in past months and deep contraction in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/cycles.html), in the lockdown of economic activity in the COVID-19 event.

Manufacturing decreased 22.3 percent from the peak in Jun 2007 to the trough in Apr 2009 and increased 18.3 percent from the trough in Apr 2009 to Dec 2019. Manufacturing increased 8.9 percent from the trough in Apr 2009 to Jun 2020. Manufacturing in Jun 2020 is lower by 15.3 percent relative to the peak in Jun 2007. The US maintained growth at 3.0 percent on average over entire cycles with expansions at higher rates compensating for contractions. US economic growth has been at only 1.2 percent on average in the cyclical expansion in the 44 quarters from IIIQ2009 to IIQ2020 and in the global recession with output in the US reaching a high in Feb 2020 (https://www.nber.org/cycles.html), in the lockdown of economic activity in the COVID-19 event. Boskin (2010Sep) measures that the US economy grew at 6.2 percent in the first four quarters and 4.5 percent in the first 12 quarters after the trough in the second quarter of 1975; and at 7.7 percent in the first four quarters and 5.8 percent in the first 12 quarters after the trough in the first quarter of 1983 (Professor Michael J. Boskin, Summer of Discontent, Wall Street Journal, Sep 2, 2010 http://professional.wsj.com/article/SB10001424052748703882304575465462926649950.html). There are new calculations using the revision of US GDP and personal income data since 1929 by the Bureau of Economic Analysis (BEA) (http://bea.gov/iTable/index_nipa.cfm) and the first estimate of GDP for IIQ2020 (https://www.bea.gov/sites/default/files/2020-07/gdp2q20_adv.pdf). The average of 7.7 percent in the first four quarters of major cyclical expansions is in contrast with the rate of growth in the first four quarters of the expansion from IIIQ2009 to IIQ2010 of only 2.8 percent obtained by dividing GDP of $15,557.3 billion in IIQ2010 by GDP of $15,134.1 billion in IIQ2009 {[($15,557.3/$15,134.1) -1]100 = 2.8%], or accumulating the quarter on quarter growth rates (Section I and earlier https://cmpassocregulationblog.blogspot.com/2020/06/mediocre-cyclical-united-states.html). The expansion from IQ1983 to IQ1986 was at the average annual  growth rate of 5.7 percent, 5.3 percent from IQ1983 to IIIQ1986, 5.1 percent from IQ1983 to IVQ1986, 5.0 percent from IQ1983 to IQ1987, 5.0 percent from IQ1983 to IIQ1987, 4.9 percent from IQ1983 to IIIQ1987, 5.0 percent from IQ1983 to IVQ1987, 4.9 percent from IQ1983 to IIQ1988, 4.8 percent from IQ1983 to IIIQ1988, 4.8 percent from IQ1983 to IVQ1988, 4.8 percent from IQ1983 to IQ1989, 4.7 percent from IQ1983 to IIQ1989, 4.6 percent from IQ1983 to IIIQ1989, 4.5 percent from IQ1983 to IVQ1989. 4.5 percent from IQ1983 to IQ1990, 4.4 percent from IQ1983 to IIQ1990, 4.3 percent from IQ1983 to IIIQ1990, 4.0 percent from IQ1983 to IVQ1990, 3.8 percent from IQ1983 to IQ1991, 3.8 percent from IQ1983 to IIQ1991, 3.8 percent from IQ1983 to IIIQ1991, 3.7 percent from IQ1983 to IVQ1991, 3.7 percent from IQ1983 to IQ1992, 3.7 percent from IQ1983 to IIQ1992, 3.7 percent from IQ1983 to IIIQ2019, 3.8 percent from IQ1983 to IVQ1992, 3.7 percent from IQ1983 to IQ1993, 3.6 percent from IQ1983 to IIQ1993, 3.6 percent from IQ1983 to IIIQ1993, 3.7 percent from IQ1983 to IVQ1993 and at 7.9 percent from IQ1983 to IVQ1983 (Section I and earlier https://cmpassocregulationblog.blogspot.com/2020/06/mediocre-cyclical-united-states.html). The National Bureau of Economic Research (NBER) dates a contraction of the US from IQ1990 (Jul) to IQ1991 (Mar) (https://www.nber.org/cycles.html). The expansion lasted until another contraction beginning in IQ2001 (Mar). US GDP contracted 1.3 percent from the pre-recession peak of $8983.9 billion of chained 2009 dollars in IIIQ1990 to the trough of $8865.6 billion in IQ1991 (https://apps.bea.gov/iTable/index_nipa.cfm). The US maintained growth at 3.0 percent on average over entire cycles with expansions at higher rates compensating for contractions. Growth at trend in the entire cycle from IVQ2007 to IIQ2020 and in the global recession with output in the US reaching a high in Feb 2020 (https://www.nber.org/cycles.html), in the lockdown of economic activity in the COVID-19 event would have accumulated to 44.7 percent. GDP in IIQ2020 would be $22,807.6 billion (in constant dollars of 2012) if the US had grown at trend, which is higher by $5601.8 billion than actual $17,205.8 billion. There are more than five trillion dollars of GDP less than at trend, explaining the 41.3 million unemployed or underemployed equivalent to actual unemployment/underemployment of 23.9 percent of the effective labor force with the largest part originating in the global recession with output in the US reaching a high in Feb 2020 (https://www.nber.org/cycles.html), in the lockdown of economic activity in the COVID-19 event (https://cmpassocregulationblog.blogspot.com/2020/07/increase-of-total-nonfarm-payroll-jobs.html and earlier https://cmpassocregulationblog.blogspot.com/2020/06/creation-of-three-million-private.html). Unemployment is decreasing while employment is increasing in initial adjustment of the lockdown of economic activity in the global recession resulting from the COVID-19 event (https://www.bls.gov/cps/employment-situation-covid19-faq-june-2020.pdf). US GDP in IQ2020 is 24.6 percent lower than at trend. US GDP grew from $15,762.0 billion in IVQ2007 in constant dollars to $17,205.8 billion in IQ2020 or 9.2 percent at the average annual equivalent rate of 0.7 percent. Professor John H. Cochrane (2014Jul2) estimates US GDP at more than 10 percent below trend. Cochrane (2016May02) measures GDP growth in the US at average 3.5 percent per year from 1950 to 2000 and only at 1.76 percent per year from 2000 to 2015 with only at 2.0 percent annual equivalent in the current expansion. Cochrane (2016May02) proposes drastic changes in regulation and legal obstacles to private economic activity. The US missed the opportunity to grow at higher rates during the expansion and it is difficult to catch up because growth rates in the final periods of expansions tend to decline. The US missed the opportunity for recovery of output and employment always afforded in the first four quarters of expansion from recessions. Zero interest rates and quantitative easing were not required or present in successful cyclical expansions and in secular economic growth at 3.0 percent per year and 2.0 percent per capita as measured by Lucas (2011May). There is cyclical uncommonly slow growth in the US instead of allegations of secular stagnation. There is similar behavior in manufacturing. There is classic research on analyzing deviations of output from trend (see for example Schumpeter 1939, Hicks 1950, Lucas 1975, Sargent and Sims 1977). The long-term trend is growth of manufacturing at average 2.9 percent per year from Jun 1919 to Jun 2020. Growth at 2.9 percent per year would raise the NSA index of manufacturing output (SIC, Standard Industrial Classification) from 108.2987 in Dec 2007 to 154.8159 in Jun 2020. The actual index NSA in Jun 2020 is 95.097 which is 38.6 percent below trend. The underperformance of manufacturing in Jun 2020 originates partly in the earlier global recession augmented by the current global recession with output in the US reaching a high in Feb 2020 (https://www.nber.org/cycles.html), in the lockdown of economic activity in the COVID-19. Manufacturing grew at the average annual rate of 3.3 percent between Dec 1986 and Dec 2006. Growth at 3.3 percent per year would raise the NSA index of manufacturing output (SIC, Standard Industrial Classification) from 108.2987 in Dec 2007 to 162.5089 in Jun 2020. The actual index NSA in Jun 2020 is 95.0970, which is 41.5 percent below trend. Manufacturing output grew at average 1.6 percent between Dec 1986 and Jun 2020. Using trend growth of 1.6 percent per year, the index would increase to 132.0671 in Jun 2020. The output of manufacturing at 95.0970 in Jun 2020 is 28.0 percent below trend under this alternative calculation. Using the NAICS (North American Industry Classification System), manufacturing output fell from the high of 110.5147 in Jun 2007 to the low of 86.3800 in Apr 2009 or 21.8 percent. The NAICS manufacturing index increased from 86.3800 in Apr 2009 to 96.1857 in Jun 2020 or 11.4 percent. The NAICS manufacturing index increased at the annual equivalent rate of 3.5 percent from Dec 1986 to Dec 2006. Growth at 3.5 percent would increase the NAICS manufacturing output index from 106.6777 in Dec 2007 to 163.9940 in Jun 2020. The NAICS index at 96.1857 in Jun 2020 is 41.3 below trend. The NAICS manufacturing output index grew at 1.7 percent annual equivalent from Dec 1999 to Dec 2006. Growth at 1.7 percent would raise the NAICS manufacturing output index from 106.6777 in Dec 2007 to 131.6999 in Jun 2020. The NAICS index at 96.1857 in Jun 2020 is 27.0 percent below trend under this alternative calculation. Table I-13 provides national income by industry without capital consumption adjustment (WCCA). “Private industries” or economic activities have share of 87.2 percent in IIQ2020. Most of US national income is in the form of services. In Jun 2020, there were 138.513 million nonfarm jobs NSA in the US, according to estimates of the establishment survey of the Bureau of Labor Statistics (BLS) (https://www.bls.gov/news.release/empsit.nr0.htm Table B-1). Total private jobs of 117.360 million NSA in Jun 2020 accounted for 84.7 percent of total nonfarm jobs of 138.513 million, of which 12.169 million, or 10.4 percent of total private jobs and 8.8 percent of total nonfarm jobs, were in manufacturing. Private service-providing jobs were 97.204 million NSA in Jun 2020, or 70.2 percent of total nonfarm jobs and 82.8 percent of total private-sector jobs. Manufacturing has share of 9.2 percent in US national income in IQ2020 and durable goods 5.5 percent, as shown in Table I-13. Most income in the US originates in services. Subsidies and similar measures designed to increase manufacturing jobs will not increase economic growth and employment and may actually reduce growth by diverting resources away from currently employment-creating activities because of the drain of taxation.

Table I-13, US, National Income without Capital Consumption Adjustment by Industry, Seasonally Adjusted Annual Rates, Billions of Dollars, % of Total

	SAAR IVQ2019	% Total	SAAR IQ2020	% Total
National Income WCCA	18,173.6	100.0	18,096.0	100.0
Domestic Industries	17,892.6	98.5	17,852.8	98.7
Private Industries	15,815.8	87.0	15,770.9	87.2
Agriculture	145.3	0.8	147.4	0.8
Mining	176.3	1.0	155.4	0.9
Utilities	207.0	1.1	204.1	1.1
Construction	946.1	5.2	954.2	5.3
Manufacturing	1702.4	9.4	1672.1	9.2
Durable Goods	1007.7	5.5	995.6	5.5
Nondurable Goods	694.7	3.8	676.5	3.7
Wholesale Trade	1015.0	5.6	1011.0	5.6
Retail Trade	1210.6	6.7	1205.5	6.7
Transportation & WH	604.3	3.3	588.9	3.3
Information	686.5	3.8	692.4	3.8
Finance, Insurance, RE	3183.6	17.5	3193.6	17.6
Professional & Business Services	2716.9	14.9	2740.0	15.1
Education, Health Care	1864.2	10.3	1871.2	10.3
Arts, Entertainment	821.9	4.5	796.4	4.4
Other Services	535.5	2.9	538.7	3.0
Government	2076.8	11.4	2081.9	11.5
Rest of the World	281.1	1.5	243.2	1.3

Notes: SSAR: Seasonally-Adjusted Annual Rate; Percentages Calculates from Unrounded Data; WCCA: Without Capital Consumption Adjustment by Industry; WH: Warehousing; RE, includes rental and leasing: Real Estate; Art, Entertainment includes recreation, accommodation and food services; BS: business services

Source: US Bureau of Economic Analysis

https://apps.bea.gov/iTable/index_nipa.cfm

© Carlos M. Pelaez, 2009, 2010, 2011, 2012, 2013, 2014, 2015, 2016, 2017, 2018, 2019, 2020.