Great Recession datapoint of the day

By Felix Salmon
April 29, 2009

From this morning’s atrociously bad GDP report:

Exports collapsed 30 percent, the biggest decline since 1969, after dropping 23.6 percent in the fourth quarter. The decline in exports knocked off a record 4.06 percentage points from GDP.

By my reckoning, that means exports are now running at half the level they were at six months ago, more or less. (These are absolute drops, right, not annualized rates?) That’s a pretty startling sign of how global this recession is, and how hard it’s going to be to turn things around. Yes, the massive decline in inventories is probably good news. But it’s really hard to see a -6.1% headline figure as anything but a brutal sign that things are continuing to get much worse than almost any mainstream economist (or government stress-tester, for that matter) dared fear.

Update: Turns out that the export declines are annualized: they’re off 11% or so in absolute terms. Which is still bad, but at least it’s not at Japanese levels.

9 comments

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“(These are absolute drops, right, not annualized rates?)”

Annualized.

On NPR’s Morning Edition today, this number was tossed in at the end of a long discussion of something else, almost as a throwaway comment. I assume this was done with the intent of burying it–I was driving when I heard it, and wondered if I’d heard it wrong. -6%. Yikes!

Posted by albatross | Report as abusive

Inflation has obfuscated economic growth reports over the past 10 years. Rising home prices sent mortgage backed securities through the roof. Investments such as these have been the big mover for the economy the past 10 years. The collapse of the housing market has erased all U.S. economic gains for the past decade. In fact I would argue there were no gains and the nation has been in contraction or stagnation all this time. What we saw as growth was merely inflation.

Now the real pain has begun and we are in a downward spiral. This is not a recession. This is a deflationary cycle, prices and wages are falling everywhere at a rapid clip. As a result so is demand for products causing more job cuts and even less demand for services and products. Let us call this what it is and put an end to denial.

Posted by Anubis | Report as abusive

Imports, on the other hand, were so weak that net exports added 2 points to the headline figure.

Inventories dropped (were written down?) by more than $100 billion; what’s the absolute level of inventories at this point? If they were written to 0 this quarter, how big a drop would that be?

According to CNN, these figures are indeed absolute:

“The first quarter decline was the second biggest drop recorded in 26 years, behind only the fourth quarter reading. GDP fell 6.3% in the last three months of last year.”

The operative words here being “in the last three months”.

Source link:
http://money.cnn.com/2009/04/29/news/eco nomy/gdp/index.htm?postversion=200904291 0

Posted by Kevin | Report as abusive

Kevin:
U.S GDP data is reported at annualized rates as is clear from the press release:
“Real gross domestic product — the output of goods and services produced by labor and property
located in the United States — decreased at an annual rate of 6.1 percent in the first quarter of 2009,…. ”
http://www.bea.gov/newsreleases/national  /gdp/gdpnewsrelease.htm

Felix,
You’ve got the export numbers wrong. The index for real exports of goods and services (2000=100) was 121.4 in 2009I as compared with 141.9 as of 2008III, a drop of 14.4%. Not great, but not as catastrophic as you indicated.

Posted by David | Report as abusive

Y’all got me confused. Let’s try and keep it simple folks. I’d be in favor of “GDP went down lately.”

Posted by Brian | Report as abusive

The rates are annualized. The indices on the press release show a drop in exports of just over 11% from 2008Q1. Still, pretty awful.

Posted by wndowd | Report as abusive