Will the US economy hit 5.0%+ GDP growth by year-end 2020? People are betting yes

[Quixote1818]

Does anyone think there will be that kind of growth at the end of this year? I am skeptical but I guess if it goes way, way down then it will only have one way to go if things start turning around: https://www.predictit.org/markets/detail/4683/Will-the-US-economy-hit-50-GDP-growth-by-year-end-2020

[OAITW r.2.0]

1. I guess I would need to know what the underlying basis is....hope? nt

[captain queeg]

2. Sounds like the voices in orange hitlers head to me

[mountain grammy]

5. Yep, me too..

[Squinch]

3. Uhhhhh... No.

[Quixote1818]

4. I agree but it's strange so many people are betting yes. ?? nt

[Squinch]

7. Very strange. And Goldman Sachs no less.

[Massacure]

16. I think you misread Goldamn Sach's statement

They are forecasting significant quarter-over-quarter improvements, but not year-over-year. Goldman is predicting a 6.2% decrease in for the year overall.

[Massacure]

14. I think I see what people are betting on here

They are essentially betting that after the COVID-19 threat passes, there will be enough backlogged demand for various goods to cause a temporary spike in U.S. GDP such that the U.S. economy produces 5% more goods in Q3 2020 than in Q3 2019 or Q4 2020 than in Q4 2019.

[smirkymonkey]

6. Umm, what are they smoking?

[FBaggins]

8. Not net... but Q3 should be quite strong

On a quarter-over-quarter annualized basis... my guess would be double-digits.

But only because Q2 will be horrific.

[kurtcagle]

9. Oh boy

Put this into perspective. In a typical year, GDP rises or falls by around 3% annualized. We're talking about a drop of 42% in two quarters, or (potentially) around 60% annualized. This assumes that 3rd quarter sees widespread dissemination of a vaccine - if it pushes into winter, it could be even worse.

The other question is how long it will take for stimulus measures to actually impact anything. So long as demand remains low, stimulus will do nothing. Moreover, I think that you're going to see some seriously painful effects as larger companies fall one by one.

We're in uncharted territory here. Any models that are made are going to be facing a huge number of unknowns, which is why I'm inclined to take this one with a significant grain of salt.

[unblock]

10. This is not unrealistic at all

If you're basically figuring the economy basically just goes on hold for a few months and then returns to normal, well, that's just a big drop in gdp followed by a big increase in gdp.

Note that the big increase in gdp isn't an indication of a trend, it's just getting back to normal. It's a big number, but not as impressive as it seems.


The real question how much of the economy breaks as the disruption goes on and on. If people and businesses can't just pick up where they left off, then it will be a longer struggle back up to where we were.

Still, enough businesses will just reopen to make gdp go up. How much and his long is the question.

[Quixote1818]

11. Good points but I think it will take many months before a lot of people feel comfortable

spending a lot of money or even going to a restaurant even if things start getting under control.

[Quixote1818]

12. But yes, if it does way, way, way down and then 5% of uptick isn't actually that much

so I see the logic.

[unblock]

15. Exactly. Gdp growth was actually huge during a good chunk of the Great Depression.

The economy contracted so much 1929-1933 that even huge growth for most of 1934 until wwii (aside from 1938) wasn't enough to feel fully "recovered".

Nevertheless, gdp grew about 13% per year 1934-1937.

[Wellstone ruled]

13. All of our GDP growth in the last 8 years

has been at the expense of the Workers Wages and lack of Benefits which produced profits which in turn went into buy backs thus inflating the value of the underling stock thus producing a false GDP scenario. And with the GOP Tax give away which once again produced more false Corporate Values.

We will not see any type of Rosy rebound. All the so called Stimulus is headed to the Big Banks and the 100 blue chip companies which will never absorb the 30 million laid off Workers.. Big Tech and Big Banks are the winners. Robotics use will accelerate replacing the Line Assembly people,more use of Contract workers with zero benefits,and watch for major wage decrease coming down the road.

[MyNameGoesHere]

17. Americans will have been cooped up for months

It's entirely possible a spending splurge for a month or two. But that would be offset by 10's of millions who are unemployed and no money to burn.

I don't know maybe.