How Far Will the U.S. Economy Plunge During Lockdown?
Excerpt:
The WEI gives us a feel of what GDP might look like in this new economy. The Great Recession, with GDP declining at less than one-third the rate indicated by the WEI, was bad enough. Today’s 11% plunge in the WEI points at a recession that would be three times deeper than the Great Recession, if the WEI persists at this level.
These are the 10 data series employed by the WEI:
Redbook Research: weekly same-store sales
Initial claims for unemployment insurance
Continuing claims for unemployment insurance
Staffing Index by the American Staffing Association
Rasmussen Consumer Index
Raw steel production (from American Iron and Steel Institute)
Electric utility output, excl. Hawaii & Alaska (Edison Electric Institute)
US fuel sales to end users (NY Fed calculations based on EIA data)
US railroad traffic
Federal withholding tax collections (Booth Financial Consulting)
The initial claims for unemployment insurance alone appear to be on a similar “three times worse” trajectory, pointing to an increase of around 25-30 million unemployed, compared to an increase of around 10 million unemployed during the Great Recession. So in terms of depth, not duration, “three times deeper than the Great Recession” might be a useful approximation until more data emerges.
https://wolfstreet.com/2020/04/21/how-far-will-u-s-economy-gdp-plunge-during-lockdowns/