• Coronavirus. One month of coronavirus destroys all jobs created in the US in 10 years
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The coronavirus recession has kicked off today with the release of preliminary United States GDP data. The lock on the world's first economy, despite the fact that it started later than in Spain and only covered the last ten days of March, has already been enough to interrupt the streak of positive GDP growth that that country had experienced for exactly six years. years from the first quarter of 2014, although the start of the expansion dates back to July 2009.

All experts take it for granted that this fall will be followed by others, over several quarters, with which the US economy thus concludes the longest expansion in its history , which has spanned almost the entirety of Barack's presidency. Obama and Donald Trump. The data published today also confirms that the only oxygen balloon in the economy is, at the moment, the State.

The decline numbers, however, are more complicated. Headlines today insist that US GDP fell 4.8% in the first quarter based on preliminary data, which will be reviewed twice more before being final, and does not include all the information on key components, such as the foreign sector and consumption. It is the biggest drop since the fourth quarter of 2008, when, with George w. Bush as president, the US brushed an economic depression with the collapse of the housing market. But that figure is not comparable to that of Spain or Europe. If US GDP were measured as on this side of the Atlantic, it would have grown, albeit by a minimum: 0.3% .

The reason is that the Department of Labor, which is the body that computes the US GDP, presents the data in an annualized quarterly series. In other words, it measures the production of goods and services for this quarter (18,988 trillion dollars), compares it with that of the last quarter of last year (19,222 trillion), and then estimates how much the decrease would be throughout the year if the trend be maintained.

Different measurements

Given that the US produced 234,100 fewer goods and services in the first three months of 2020 than in the last three months of 2019, if the decline is projected to all of 2020, the decrease is 4.8%. It is a system that exaggerates the volatility of the data . As Mohamed El-Erian, former number two of the world's largest fixed-income manager, PIMCO, and advisor to the German insurer Allianz, points out, with this trend, US GDP will fall 40% in the second quarter. But don't panic (more than necessary): US production is not going to collapse in half. We have enough with what is falling.

If GDP is measured as it is in Europe, the data for the first quarter of 2020 ($ 18.988 trillion) is compared with that for the first quarter of 2019 ($ 18.927 trillion). In that case, production was higher, albeit by a minimum: just $ 61 billion. Therefore, the GDP would have grown by 0.3%. When comparing year to year, this system presents the danger of not showing the current trend of the economy .

This is evident with the components of GDP. Private consumption fell a spectacular 7.6% . It is the biggest decline in 39 and a half years, since the hyperinflation period of the 1970s and early 1980s, and something particularly important in the US, where private consumption accounts for 70% of GDP. Business investment also fell. And the only thing that saved the furniture a little was residential investment and, above all, public spending.

The first of these factors - residential investment - is slowing down, as the real estate sector is deflated by the crisis, so that only the State will be able to pull the economy in the coming quarters. Just today the Federal Reserve concludes a monetary policy meeting that the market is very pending, since it will offer a more updated vision of the state - presumably catastrophic - of the economy due to the coronavirus.

The market does not usually pay attention to GDP as it is only a partial x-ray of the economy from four weeks ago . The Fed's analysis is going to be much more up-to-date. And, in addition, the Stock Market has all the liquidity in the world to face the crisis. In fact, falls in equities have been much better than would be expected given the collapse of the real economy.

Recovery in 2009

The United States officially emerged from its last recession in June 2009 , when Obama had been in the White House for five months, according to the think tank National Bureau of Economic Research (NBER), which the Washington Government has granted the power to define the expansions and recessions of the country.

Technically, a recession occurs when the GDP falls two consecutive quarters, but the NBER uses a more complex system, which is based not only on national production but also on employment and other indicators. For now, in just five weeks of confinement, the country has already destroyed more jobs than all those created in these ten and a half years of expansion.

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  • Coronavirus
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  • Covid 19

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