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The dangers of driving by looking in the rear view mirror

26 March 2020

The US announced its final measure of GDP for the last quarter of 2019 – that seems like a long time ago now with all that has changed so far this year. At 2.1% annualised growth this number is essentially meaningless – a picture of old, 85 days ago before the world entered its current demand shock lockdown. Coincidentally, and more expressive of the US economy’s current woes, unemployment claims for the last week saw a “never seen before” record jump (to steal that often used trope from Trump, although I am sure he won’t be bragging about this one). The sharp recessionary economic effects that everyone feared are now starting to be confirmed by the numbers. To put this into context, the highest ever weekly claim before now was just under 700,000, way back during the 1982 recession, and even in the heights of the financial crisis over 10 years ago, we didn’t see a number much over 650,000. That 3.283 million people signed up for unemployment claims last week is also probably under-reported as many states in the US experienced overwhelming demand for claim registrations. This points to continuing employment stress over the next few weekly releases. No wonder President Trump seems so keen to get America working again, seemingly at any cost.

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