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GDP Shrinks Record 32.9 Percent In Second Quarter Amid Virus Lockdowns

The U.S. economy shrunk at a seasonally adjusted annualized rate of 32.9 percent during the second quarter of 2020 as the first wave of the coronavirus pandemic spurred an economic collapse of record-breaking speed and size, the Commerce Department reported Thursday.

Between April and June, U.S. gross domestic product (GDP) shrunk at a pace that would have wiped out roughly a third of the value of the economy if extended over 12 months, according to the Commerce Department’s advance estimate of second-quarter growth. It is the largest one-quarter plunge in economic growth since the federal government began reporting quarterly GDP data. 

“This was the steepest decline since the start of the global financial crisis in 2008, when output shrank by 8.4%,” wrote Agathe Demarais, global forecasting director at The Economist Intelligence Unit in a Wednesday preview of the report. “The scale of the fall in the first quarter will be dwarfed by that in the second.”

On a non-annualized basis, GDP shrunk roughly 9.5 percent between the first and second quarters of 2020.

The staggering decline in GDP growth was widely expected by economists after the onset of the coronavirus pandemic forced millions of Americans into quarantine and out of work. More than 20 million Americans lost their jobs in March and April as thousands of businesses were forced to close and lay off their workers.

The mass layoffs and business closures derailed consumer spending, sapping a crucial source of strength for the U.S. economy that drives roughly two-thirds of annual growth. Spending on goods and services plunged at a seasonally adjusted annualized rate of 34.6 percent in the second quarter, another record-breaking plunge.

“Consumption is the biggest component of GDP — almost 70% — so this drop alone will have subtracted some 24 percentage points from headline growth,” wrote Ian Shepherdson, chief economist at Pantheon Macroeconomics in a Thursday research note.

Investments in buildings, equipment and intellectual property — important drivers of U.S. economic production — fell at a yearly rate of 49 percent. Exports also plunged at a yearly rate of 64 percent.

While the economy has since regained roughly 8 million of the jobs lost during the pandemic, a second surge of cases has slowed the burgeoning recovery. Permanent job losses increased in each of the past two monthly jobs reports despite strong net totals and the number of unemployed Americans applying for weekly jobless benefits has remained above 1 million for four months.

The Labor Department reported on Thursday that initial unemployment claims rose for the second week in a row to a seasonally adjusted 1.43 million for the week ending July 25. Another 829,000 jobless workers applied for benefits through the Pandemic Unemployment Assistance program for contractors and gig workers not typically covered by traditional unemployment insurance.

The Trump administration, Senate Republicans and Democratic congressional leaders are struggling to strike a deal on another economic rescue package to guide the U.S. through the pandemic-driven recession. Lawmakers have already missed a window to come to an agreement before enhanced unemployment benefits effectively lapsed and a federal eviction and foreclosure moratorium expired on July 25.

Economists have warned that the steep decline in fiscal support from Congress and the impact of a second wave of coronavirus infections could cause deep long-term damage to the U.S. economy that could take years to reverse. 

“While the initial rebound in monthly activity was stronger than expected, the recent flattening in high frequency indicators suggests a more gradual pace of recovery from here,” wrote economists at Nomura in a Wednesday research note.

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“If We Knew Then What We Know Now…” There Would Have Been No Lockdowns



This ought to be the theme set by President Trump in his renewed Covid-19 briefings, and the completion of the sentence is:  “we would not have ordered a shutdown—and that is why we can now lift all remaining lockdowns and covid-related restrictions throughout this country.”

The overwhelming power of this theme, and the overwhelming rationale for using it, comes from the simple fact that it is true.

  • We know now that Covid-19 is an unpleasant disease, a dangerous and potentially fatal disease for the elderly and infirm, and an extremely rare disease in children.
  • We know now there are therapeutic treatments—hydroxychloroquine is the foundation of one entire branch of remedies (which Trump himself made use of), and inhaled steroids (budesonide being one) are another—which are showing undeniable efficacy all over the country.
  • We know now the lethality of Covid-19 is comparable to that of a bad flu (and that assumes the reported ‘Covid-19 deaths’ are not substantially overstated, though there is abundant evidence that they are—which would mean the actual lethality may be significantly less than a bad flu).
  • “Spikes” in new ‘cases’ reflect increased testing and the predominance of mild and completely asymptomatic incidents of the disease (and a large amount of false positive and fraudulent reporting); they have only confirmed the low lethality rate (and driven it lower)

Had all of the foregoing been known at the time of the initial outbreak, there would have been no lockdown, and probably no restrictions of any kind.  The disease would have spread as contagious diseases do, the especially sick would have been treated in hospitals and ICUs, and the remaining cases would have run their course with infected people missing a few days of work, recovering, and going back to work.

There is no shame in acknowledging this truth.  A contagious virus seeming to originate from China and possibly from a CCP bioweapons lab deserved special precautions.  The US national public health authorities advised special precautions, and President Trump followed their advice.  To say now that their advice turned out to be overcautious is not to say they acted in bad faith (though the jury is still out on Fauci), nor is it to say that Covid-19 is no big deal.

It is simply to point out truth in a common sense, understandable way that allows Americans to break free of the paralysis of fear—and simultaneously breaks the rationale of the continued stranglehold that some state and local officials are still imposing on the American people.

It is unfathomable that President Trump does not know the truth about what we now know about Covid-19.

And so Trump’s continued public statements that:

(1) label Covid-19 ‘the plague’;

(2) tout his decisions to shut down air travel from China and then authorize the shutdown of the country as ‘saving millions of lives’;

(3) endorse the PC view that mask-wearing is a patriotic, unselfish act; and

(4) enshrine the mantra of urging patient endurance because ‘the vaccine is coming, the vaccine is coming!

…can only reflect

(a) a political calculation that admitting governmental overreaction to Covid-19 will harm his re-election prospects, or

(b) a personal predilection against ever admitting error—even when it was not in fact his error, or

(c) that his own germaphobia has him still fearful—

or some combination of the above.

This is a tragic, unnecessary and massive miscalculation by President Trump, and the American people are paying a huge price for it.  They are ready to power their economy to a strong rebound, but Trump is enabling the lockdowns and fear to continue.  His public posture allows Newsom and Cuomo—to name just two blue state governors—to continue the dictatorial tyranny in the name of ‘science’, when there is no science whatsoever behind continued lockdowns.  But there is a continuing fear created by the initial overreaction, and this is easily leverageable by governors and local officials who want to use it to be little Napoleons in their own domains.

Just in time for the November election, the continued lockdowns in major states are going to make the monthly economic news for August and September (and maybe even July) likely to turn stagnant or negative.  The MSM will go bonkers when that happens, and Trump will be left talking about another ridiculous funny money stimulus, bizarre ideas for how to operate schools with masks and social distancing, and promising delivery of a vaccine that still won’t be ready but will be proceeding on what looks increasingly like a rushed, caution-to-the-winds development plan.

A majority of Trump supporters—probably even a large majority—will walk barefoot over broken glass to vote for his re-election in November no matter what the status of Covid-19 lockdowns or anything else, simply because the alternative of the radical left governing this nation is too frightening to even consider.  But if Trump loses the election because of a re-sagging economy, unhappy parents of school-age children, and general fatigue from pandemic fear—all associated with Trump as President—he will have no one to blame but himself.

President Trump, please trust the truth.  Truth has power; truth enables and empowers freedom—which is the bloodstream of America.  Admitting the truth is calming, clarifying, health-giving.

The truth is:  if we knew then (back in February) what we know now about Covid-19, there would have been no lockdowns.  Which means there do not need to be any lockdowns now.

Let’s trust our doctors and healthcare system to ride this out, and get on with life in America.  NOW.

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Kristi Noem Protected Her State’s Economy — And Kept People Safe

She resisted the pressure to lockdown.

by Ellie Gardey

Gov. Kristi Noem of South Dakota announced Thursday that her state achieved a $19 million surplus for the 2020 fiscal year.

For Noem, one of five governors who did not issue a stay-at-home order, it was a vindication of her hands-off approach to the COVID-19 pandemic, which protected her state’s economy while at the same time safeguarding the health of the people of South Dakota.

“As many states closed their economies, I trusted South Dakotans to make the right decisions for themselves and their loved ones,” said the 48-year-old Republican governor in announcing the surplus. “Our future remains bright because we kept our state open for business and we live within our means.” 

South Dakota experienced one of the smallest outbreaks of the virus in the nation even without the stringent measures imposed on most of the country. This is likely a consequence of the state’s low population density, its rural nature, voluntary social distancing, and the reasonable restrictions Noem did set in place.

Only 116 deaths attributed to COVID-19 have been recorded as of Friday in the state, which has the fifth-lowest population density in the nation and a population of around 880,000. South Dakota has also not experienced a recent climb in cases like many states have — on Thursday, July 16, the state recorded only 42 new cases. 

The surplus is more evidence that South Dakota’s economy has been spared the devastation wrought in other states by the pandemic. 

Across the country, states are facing budgets destroyed by drastically reduced tax revenue and increased spending to fight the virus: Connecticut had a $1 billion deficit for the 2020 fiscal year and New York had a $13.3 billion deficit for the fiscal year, for instance.

Sales and use tax, South Dakota’s largest revenue source, grew 4.6 percent in 2020 over the last fiscal year, according to a press release

South Dakota has also recorded the second-smallest contraction in gross domestic product of any state in the first quarter of 2020, according to the Bureau of Economic Analysis. Only Nebraska, which also did not have a stay-at-home order, fared better. 

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The COVID-19 Lockdown Induced Housing Crisis Of 2020

Millions Of Americans Missed Their Last Rent Payments, And Tens Of Millions Could Soon Be Evicted

By Micheal Snyder

Most Americans believe that “the worst is behind us”, but the truth is that we are sleepwalking into an unprecedented economic nightmare.

Week after week we continue to get economic numbers that are absolutely horrific, and it appears that we are heading for a housing crisis that will be even worse than what we witnessed in 2008. 

Back then, millions of Americans lost their homes, but this time around it could be tens of millions.

I know that a statement like that may sound overly dramatic, but I believe that many of you that feel that way may change your minds after reading this entire article.

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It Starts: Mortgage Delinquencies Suddenly Soar at Record Pace

And this is just for April, the very beginning of the Pandemic’s impact on housing.

By Wolf Richter for WOLF STREET.

OK, it’s actually worse. Mortgages that are in forbearance and have not missed a payment before going into forbearance don’t count as delinquent. They’re reported as “current.” And 8.2% of all mortgages in the US – or 4.1 million loans – are currently in forbearance, according to the Mortgage Bankers Association. But if they did not miss a payment before entering forbearance, they don’t count in the suddenly spiking delinquency data.

The onslaught of delinquencies came suddenly in April, according to CoreLogic, a property data and analytics company (owner of the Case-Shiller Home Price Index), which released its monthly Loan Performance Insights today. And it came after 27 months in a row of declining delinquency rates. These delinquency rates move in stages – and the early stages are now getting hit:

Transition from “Current” to 30-days past due: In April, the share of all mortgages that were past due, but less than 30 days, soared to 3.4% of all mortgages, the highest in the data going back to 1999. This was up from 0.7% in April last year. During the Housing Bust, this rate peaked in November 2008 at 2% (chart via CoreLogic):

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Video: Migrant Caravan: Its Purpose in Warfare Against the U.S. | Honduras Caravan 2018

Is the #MigrantCaravan a way out for migrants fleeing violence and poverty at home, or an opportunity for foreign intelligence personnel and terrorist groups to undermine the United States? In 2018 the migrant caravan became a hot button issue in the midterm elections. #Border protection and security is one of the most important concerns of any country. In this video we discuss who might be the biggest beneficiary of the #Honduras migrant caravan.


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China Started the Trade War, Trump Is Just Trying To End It

By Andy Puzder

President Trump didn’t start a trade war with China – he’s trying to end and win the trade war that China launched against the U.S. As the president has frequently pointed out, the Chinese have been undermining the world trade system for years, and no country has been hurt more by China’s unfair actions than America.

America’s trade deficit with China  is so large it almost defies comprehension. Since 2012, our yearly deficit in the trade of goods with China has consistently topped $300 billion. Last year, it was over $375.5 billion. In the first five months of this year it topped $150 billion.

A primary reason for this imbalance is that the Chinese have been blocking American manufacturers and food producers for years through discriminatory trade rules and prohibitively expensive import tariffs designed to keep U.S. products out of its domestic markets.

It’s not that American firms are unable to compete with Chinese companies. Rather, it’s because China systematically takes measures to protect its industries and businesses from having to compete with American companies on a level playing field.

The Chinese government gives huge subsidies to its own firms and excludes foreign companies from doing business in China. It regulates foreign firms unfairly, blocks imports through dishonest health and safety rules, and creates China-specific standards to prevent market entry.

In addition, China forces foreign firms to transfer their technology to Chinese companies and comprehensively loots commercial secrets, especially from American firms.

No one (outside of Chinese officials) denies any of this. In March, the U.S.-China Economic and Security Review Commission – a bipartisan congressional advisory body – published a list of 10 ways China cheats on trade called “China’s Technonationalism Toolbox.”

This list includes China’s continued “pervasive industrial espionage against U.S. companies, universities, and the government” as well as China’s “direct efforts to circumvent U.S. export controls to gain access to cutting-edge technologies and intellectual property in strategic sectors.”

China’s subversion of world trading norms isn’t a bug in the nation’s economic system. It’s a feature.

Even Democrats recognize the importance of President Trump’s trade sanctions on China.

“We're now told that this is Trump's trade war,” Rep. Brad Sherman, D-Calif., said during a Foreign Affairs subcommittee hearing earlier this month. “No, China declared (a) trade war on the United States 18 years ago,” he continued, referring to the decision to normalize trade relations with China in 2000.

Both Senate Minority Leader Chuck Schumer of New York and Sen. Elizabeth Warren of Massachusetts, two of President Trump’s most vocal Democratic critics, are broadly supportive of the president’s measures to combat Chinese cheating.

“I have to say, when President Trump says he's putting tariffs on the table, I think tariffs are one part of reworking our trade policy overall," Warren told CNN in March. 

“China takes total advantage of the United States. They steal our intellectual property using cyber theft,” Schumer noted in June. “Not only do they steal our intellectual property, they keep our good companies out, and say the only way you’re going to be able to sell your American products in China … is if you come to China.”

Because presidents before him avoided doing what was necessary to balance our trade relations with China, President Trump has to fight a trade war not of his own making. Fortunately for American workers, manufacturers and exporters, the president is fighting back against China and other nations that have been ripping off America for decades. 

This will be a difficult struggle, because other nations are unwilling to give up the benefits of unfair trade. They will test President Trump’s resolve, particularly as we approach the midterm elections in November. But thanks to President Trump’s leadership, we are beginning to see that this is a war we can win.

In May, China agreed to slash car tariffs and import more American-made products due to President Trump’s tough negotiating skills. 

Free trade requires fair trade, based on a common set of mutually beneficial rules. We finally have a president willing to take the actions necessary to put a stop to Chinese cheating and to protect America’s national interests.

President Trump isn’t just fighting to stop Chinese market manipulation. He’s fighting to secure a bright economic future for America and the American people.

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