The devastating GDP numbers announced at the end of July—a decline of 9-and-a-half percent—are the worst in American history, according to Ford School economics professor Justin Wolfers. The way the numbers are reported, that at an annualized rate the economy was on track to shrink by 32-point-nine percent. Appearing on The Indicator on Planet Money, Wolfers says that such a scenario was unrealistic.
He says measuring this moment is difficult, because during the quarter, businesses had shut down and employees laid off directly as a result of the COVID-19 pandemic.
“Hopefully this is temporary. The real question is how much of it is permanent? How much is directly-pandemic induced. Will we bounce all the way back up, half way, more, or less? That has massive implications for how the next few years play out.”
He concludes that the economy is in suspended animation and “We’ll just have to wait.”
You can hear the segment here.