We Just Went Through the Worst Month Since the Great Recession
We already knew the economy really struggled over the first few months of 2015, with March being especially rough. A new report from economists at Macroeconomic Advisers shows just how bad a month it really was.
The forecasting firm, which tracks economic progress on a monthly basis rather than just a quarterly one, now says that GDP fell 1 percent in March. “This was the largest decline since December 2008, when the U.S. economy was in the throes of recession,” its update notes.
The Commerce Department initially estimated that GDP grew at a seasonally adjusted annual rate of 0.2 percent in the first quarter. An updated report, due May 29, is now expected to show that the economy actually shrank over the first three months of the year. J.P. Morgan economists have lowered their tracking estimate of first-quarter GDP from -0.8 percent to -1.1 percent based on data released over the last two days.
Related: Why So Many Americans Are Trapped in ‘Deep Poverty’
As we’ve written before, though, the downturn isn’t necessarily reason to worry about the fundamental health of the economy, or at least it shouldn’t stoke fears that we’re diving into another recession. As the Macroeconomic Advisers report explains, “A sharp decline in net exports more than accounted for the decline in monthly GDP, as resolution to the West Coast port dispute led to a surge in imports to well above the recent trend. As a result, they write, they believe the one-month plunge “overstates the underlying weakness in the economy.”
That’s not to say the economy is particularly strong, either. Both Macroeconomic Advisers and J.P. Morgan now forecast second-quarter GDP growth to come in at a tepid 2 percent annualized rate.
Chart of the Day: Long Way to Go on Coronavirus Testing
The White House on Friday unveiled plans for a new effort to ramp up testing for Covid-19, which experts say is an essential part of limiting the spread of the virus. This chart from Vox gives a sense of just how far the U.S. has to go to catch up to other countries that are dealing with the pandemic, including South Korea, the leading virus screener with 3,692 tests per million people. The U.S., by comparison, has done about 23 tests per million people as of March 12.
After Spending $2 Billion, Air Force Bails Out on Planned Upgrades of B-2 Bombers
The Air Force has scrapped a planned upgrade of its B-2 stealth bomber fleet — even after spending $2 billion on the effort — because defense contractor Northrup Grumman didn’t have the necessary software expertise to complete the project on time and on budget, Bloomberg’s Anthony Capaccio reports, citing the Pentagon’s chief weapons buyer.
Ellen Lord, the undersecretary of defense for acquisition and sustainment, told reporters that the nearly $2 billion that had already been spent on the program wasn’t wasted because “we are still going to get upgraded electronic displays.”
Big Hurdle for Sanders’ Plan to Cancel Student Debt
Bernie Sanders wants to eliminate $1.6 trillion in student debt, to be paid for by a tax on financial transactions, but doing so won’t be easy, says Josh Mitchell of The Wall Street Journal.
The main problem for Sanders is that most Americans don’t support the plan, with 57% of respondents in a poll last fall saying they oppose the idea of canceling all student debt. And the politics are particularly thorny for Sanders as he prepares for a likely general election run, Mitchell says: “Among the strongest opponents are groups Democrats hope to peel away from President Trump: Rust Belt voters, independents, whites, men and voters in rural areas.”
Number of the Day: $7 Million
That’s how much Michael Bloomberg is spending per day in his pursuit of the Democratic presidential nomination, according to new monthly filings with the Federal Election Commission. “In January alone, Bloomberg dropped more than $220 million on his free-spending presidential campaign,” The Hill says. “That breaks down to about $7.1 million a day, $300,000 an hour or $5,000 per minute.”