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The BEA reports Real GDP fell at 32.9 percent annualized. The quarterly decline compared to a year ago is 9.5%. Both are records.

Consumer Metrics Comments

Rick Davis at Consumer Metrics has additional comments.

Although there are some legitimately startling numbers in the release, the size of the headline number is a consequence of "annualizing" a single quarter of dramatic economic displacement.

The quarter might better be measured in a year-over-year comparison against the 2nd Quarter of 2019. In inflation adjusted "real" dollars the overall economy shrank by -9.54%. 

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Key Points 

  • Consumer personal expenditures declined only -1.79% in goods but -14.65% in services. The difference between those two categories makes sense -- roughly the same spending level on groceries but fewer haircuts and massages. 
  • Food and beverages purchased for off-premise consumption was up nearly +6% year-over-year, spending on food services and accommodations was down nearly -40% year-over-year
  • Spending on recreational goods soared (up +15.33% year-over-year), and spending on recreational services plummeted -54.13%. 
  • In the non-consumer sphere, spending by non-profits increased +51.53% year-over-year
  • Commercial spending on computer hardware (+9.73%) and software (+6.13%) also increased year-over-year.
  • Annualized household disposable income was reported to be $4382 higher than in the prior quarter, and the household savings rate was reported to be 25.7%, up 16.1pp from the prior quarter. These numbers comes from and annualization of the Federal relief payments from the CARES act, but the outrageous savings rate seems to indicate that households were reluctant (or unable) to spend those funds.

Mish