While admittedly partisan when I say things are bad in America I’m just telling the truth. Some recent numbers back me up. Let’s explore.
The most interesting number I came across was the relatively obscure Disposable Personal Income (DPI). It was up $1.53 trillion or 42.1% in the second quarter of 2020. (For my fellow economic nerds, looking at definitions I could not find a difference between DPI and Discretionary Disposable Income (DDI) that I’m used to using.) Basically the number represents the money American consumers had to spend after taxes, withholdings and living expenses; in other words the money left to chase discretionary purchases which is a huge part of the consumer demand that accounts for 70% of the demand function in the American economy.
In the midst of the Trump Depression you have to assume that the stimulus and the $600 per week federal supplement to unemployment compensation was a big part of that $1.53 trillion (or $6.12 trillion when annualized). The GOP Senate caucus is in such disarray that they left town on Thursday letting the unemployment supplement expire.
The latest proposal the Republicans have put on the table for a federal unemployment supplement is $200 per week. Let’s look at just what that means. Assuming we have 20 million Americans collecting unemployment compensation (and the number is probably closer to 30 million) at $400 a week less that means the economy (think: consumer demand) loses $32 billion per month. Annualized it is $384 billion. Remember these estimates are very much on the low side.
Staying with unemployment for a bit, last week’s new claims number was slightly more than 1.4 million. This was consistent with the prior three week and in my opinion constitutes the floor of what will be a V or U shaped curve. Again, it is larger than five times the norm; certainly nothing to crow about.
Thursday the Commerce Department released the second quarter GDP (Gross Domestic Product) numbers and they were down 9.4%. That is the largest ever drop in American quarterly GDP in recorded history by more than a factor of 2. Annualized, that means the American economy would lose about one-third of its productivity. Most people really can’t relate to economic terms like GDP but that is astounding, and I don’t mean in a good way!
The number one factor contributing to the current economic collapse is the coronavirus pandemic. (Keep in mind Trump’s many other economic follies many of which are starting to show.) The reality is that under Trump’s “leadership” America has had by far the worst response to the pandemic of any advanced country in the world. Until we contain the pandemic the economy will continue to sink. It is that plain and simple!
We are now over 4.5 million confirmed cases in America that have led to over 150,000 confirmed deaths. Only the willfully ignorant maintain the numbers are overstated when in fact it is demonstrable that they are understated.
While today’s main focus is economic I would be remiss not to pay at least brief attention to foreign policy. Defense Secretary Mark Esper announced the withdrawal of 12,000 American troops from Germany. Now bear in mind I’m an advocate of lowering the number of American troops on foreign soil as a cost cutting measure. My issue in this case is how it came about. Trump got angry with German Chancellor Angela Merkel when she led the prudent “boycott” of the G7 meeting due to Trump’s abysmal failure at containing the pandemic in America. Those 12,000 troops are an economic boost to Germany and this was punishment.
Furthermore let’s look at who wins in this move. About half of the troops will be redeployed to America with the other half dispersed among Belgium and Italy. This weakens NATO which is a major objective of Vladimir Putin’s. Putin and to a lesser degree Russia are the winners. Trump promised a lot of winning under him; he just didn’t tell us that Putin would be the biggest winner.
I know I threw around a lot of big numbers that are difficult for the average American to relate to. We relate to “our kind of numbers” – the hundreds and thousands that we run our households on. Let me give you a simple illustration of how big one billion is. If you earned $50,000 a year it would take you 2,000 years to earn a billion dollars. Just for reference a trillion is 1,000 billion.
Mr. Trump your numbers look very, very bad!
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