Economy in a nose dive

The Bureau of Economic Analysis announced today that U.S. real GDP fell at a 4.8% annual rate in the first quarter of 2020. That’s a rate of decline that we only see historically during the worst quarter of a recession.

Real GDP growth at an annual rate, 1947:Q2-2020:Q1, with the 1947-2019 historical average (3.1%) in blue and post-Great-Recession average (2.3%) in red.

The new data brought the Econbrowser Recession Indicator Index up to 32.5%, the highest it’s been since the Great Recession. This is not a forecasting tool, but rather is an assessment looking back at where the economy was in the fall quarter of 2019. Its pessimistic assessment of 2019:Q4 is based on the dismal initial GDP report for 2020:Q1 and the fact that expansions and recessions exhibit substantial inertia. We will wait for revisions of the 2020:Q1 GDP estimate and the initial report of 2020:Q2 GDP before calculating the value of the index for 2020:Q1.

GDP-based recession indicator index. The plotted value for each date is based solely on information as it would have been publicly available and reported as of one quarter after the indicated date, with 2019:Q4 the last date shown on the graph. Shaded regions represent the NBER’s dates for recessions, which dates were not used in any way in constructing the index, and which were sometimes not reported until two years after the date.

Lower consumption spending led the nosedive. Lower spending on consumer services, normally one of the most stable components of GDP, by itself would have caused a 5.1% annualized decline in the overall real GDP growth rate if all other spending had held steady. Consumer durables, a more typical casualty in recessions, played its normal role, subtracting another 1.2% from the GDP growth rate. Construction of new homes was one bright spot, making a modest positive contribution.

The numbers are all the more dreadful when we realize that 2020:Q1 GDP was the sum of three months, the first two of which were fairly decent. An indicator of what’s in store comes from new claims for unemployment insurance, which have been literally off the charts.

Number of people filing initial claims for unemployment insurance each week, seasonally adjusted, Jan 7, 1967 to Apr 18, 2020. Source: FRED.

In the last six weeks, the total number of new claims for unemployment insurance was 25.4 million more than usually expected over 6 weeks. Millions more newly unemployed are expected to be added to those 25 million people when last week’s number is announced tomorrow. This compares with a baseline count of 6 million people already unemployed and a total labor force of 163 million.

Number of people filing initial claims for unemployment insurance each week, seasonally adjusted, Jan 5, 2019 to Apr 18, 2020. Source: FRED.

If say 20 million of the new filers are still unemployed by the second week of May (the reference week for the May unemployment report), we’d be talking about an unemployment rate of 26/163 = 16%. As a reality check on that calculation, the Congressional Budget Office is currently anticipating an average unemployment rate of 14% for 2020:Q2. Their numbers or mine would again be off the charts, higher than anything the U.S. has experienced since World War II. For reference, the most recent unemployment rate reported for the U.S. (focused on the second week of March) was 4.4%.

We can do a quick calculation of what this could mean for GDP. Okun’s Law is a relation between GDP growth and the unemployment rate. In its simplest form, we can calculate a regression of quarter t‘s real GDP growth on the change in the unemployment rate between the last months of quarters t -1 and t. The results of this regression, estimated for t running from 1948:Q2 to 2020:Q1, are as follows ((standard errors in parentheses):

Note that I’ve measured the left-hand variable GDP growth here as 100 times the quarterly change in the natural logarithm, so these are quarterly, not annualized, GDP growth rates. The equation says that if the unemployment rate increases by 1% in a quarter, we’d expect to see real GDP lower by 1.55% during that quarter. If we’re talking about an 11% higher unemployment rate in 2020:Q2 compared to 2020:Q1, the above regression would predict quarterly real GDP growth for 2020:Q2 of 0.769 – (1.554)(11) = -16.325; approximately a 16% drop in real GDP within the quarter. Quoting that at an annual percentage rate as Americans are accustomed would be [exp(4 x -0.16325) – 1] = -48.0%. That is, instead of the -4.8% number that BEA reported for 2020:Q1 GDP growth, we could see -48% for Q2.

CBO is projecting a number for that headline annualized 2020:Q2 real GDP growth rate of -40%. Morgan Stanley says -38%.

Bottom line: the 2020:Q1 GDP numbers are very bad. The Q2 numbers could be an order of magnitude worse.

68 thoughts on “Economy in a nose dive

  1. sammy

    Not only that but the shutdown didn’t really start until Mid March, so we only have 2 weeks or so of those numbers in 1Q!

    1. pgl

      A lot of the economy was scaling back well before March 16. Just ask the airlines and hotel sector.

    2. pgl

      I just check the stock price history of some of our airlines. Their stock prices started falling off the cliff around Feb. 20. So Sammy’s 2 weeks is more like 5 weeks. Of course Sammy has been reluctant in the past of looking at actual market data.

      1. 2slugbaits

        That’s exactly why the fact checkers were all over Trump’s claim about the tough and supposedly unpopular shutting down of air travel to and from China. Trump’s executive order was effectively a dead letter because almost every airline had already suspended flights on their own long before Trump “acted.”

  2. pgl

    “CBO is projecting a number for that headline annualized 2020:Q2 real GDP growth rate of -40%. Morgan Stanley says -38%.”

    This is on par with what other economists were forecasting. The Q1 drop is sort of we were expecting too. The real question is what is in store for the 2nd half of 2020. Let’s hope we see a significant uptick even if we will very unlikely still be far from normal.

    1. 2slugbaits

      It is good news; however, my understanding is that while Remdesivir reduced the recovery times (which is definitely good news), there wasn’t any statistically significant improvement in the overall survival rate. So if you were going to survive, you recovered quicker and with less pain. But we still need to find some treatment that conclusively improves the mortality rate.

      1. baffling

        my reaction to this was similar. we need to see an improvement on the death rates. it is good that it can get the survivors out of the hospital faster. this helps the healthcare front line tremendously, as it reduces overall demand on hospital resources. but i would feel better if it shows a statistically significant improvement on mortality. right now it is helping 50% of the patients get out of the hospital sooner, which is good, but below what i call a silver bullet. it is not yet a game changer, but certainly helpful.

      2. Bruce Hall

        2slug, our focus, naturally, is on the U.S. But elsewhere, there has been success treating Covid19 patients if medication begins before patients become critically ill.

        “According to GoodRX, the lowest price for the most common version of Chloroquine is around $60.96, which is 60 percent off the average retail price of $155.27 for 30 of the 250-milligram tablets and around $74.38, 84 percent off the average retail price of $494.50 for 30 of the 500-milligram tablets.” That’s about $2 per tablet.

        Remdesivir is an experimental drug with patent protection. It’s interesting that the Chinese are attempting to profit from a pandemic originating in their country.

        1. pgl

          My focus has been on the research globally as this is a worldwide issue but once again Bruce you forgot to actually read your own link about Turkey. Your favorite treatment is showing a little success in treating pneumonia. Maybe you think COVID-19 is the same thing. You are truly that stupid.

        2. pgl

          “Remdesivir is an experimental drug with patent protection. It’s interesting that the Chinese are attempting to profit from a pandemic originating in their country.”

          We went through this idiot. Gilead is fine with other companies doing the manufacturing. They will just charge them royalties for the use of their IP. I guess you have no clue how the global biopharma sector works. Now run along and listen to Dr. Fauci’s discussion of the progress this drug has made in actual phase III clinical trials!

        3. pgl

          Did you read the part about testing? I guess not:

          “Turkey has so far conducted about 948,000 COVID-19 tests, according to the data-gathering website That equates to a testing rate of about 11,200 people per million residents. By comparison, the U.S. has tested almost 19,000 people per million, and proactive Germany almost 25,000 per million. While Turkey’s relatively low test rate might suggest even more impressive mortality figures, there are also concerns that the official death toll for the country — the other half of the mortality equation — could be a significant underestimate.”

          Turkey’s testing sucks. Ours is not much better. 1.9% of the population is not going to get it done. Now Trump said we were testing 5 million people per day. When his own experts said that was not true and not even feasible given Trump’s incompetence so far, Trump said we did not need so much testing. Real experts would argue we should test 20 million people per day.

        4. pgl

          I guess no one told Brucie boy to consult with the Rx Forum:

          “Turan said the combination of drugs appeared to “delay or eliminate the need for intensive care for patients.” But it’s important to note that Turkey’s use of the drug is not a clinically controlled trial; there’s no control group of patients not given the medication to compare the results against.

          Clinical trials have been underway in the U.S. and elsewhere, but the results aren’t yet clear. Preliminary studies on hydroxychloroquine have yielded uninspiring results thus far.”
          No clinical trials. Just government officials in Turkey acting a lot like Donald Trump. Yea – right!

        5. David O'Rear

          Mr Hall,
          Has there ever, in the history of patents, been an epidemic in which local pharmaceutical companies DIDN’T attempt to profit?

          1. pgl

            I think what Bruce was trying to say goes something like this. The Chinese were trying to profits off of Gilead’s IP. Sort of like PeakTrader screaming about how China steals our IP. Remember that nonsense?

            Of course Bruce Hall just ignores three basic things:

            (1) Gilead relies on third party manufacturers all the time charging them for the use of their IP via things like royalties. In this case, the more manufacturers the more treatments can be administered.

            (2) The quest to find treatments etc. is a global one which should require efforts from the smart scientists in China. Yea I know Trumpian racists like Bruce cannot even imagine that China has smart people but they do.

            (3) Gilead has decided to denote for free this year’s production of this treatment. How on earth does one profit this way? One doesn’t. Of course Bruce Hall is too stupid to read an Annual Report or listen to an earnings call.

    2. Bruce Hall


      I would think everyone would cheer this great news but it seems Bruce Hall was a naysaying just today. Gotta wonder why.

      Citing a Chinese study and Reuters is “naysaying”? Grow up.

      You simply hate anything that goes against your bias. Speaking of which…

      When the government of Sweden defied conventional wisdom and refused to order a wholesale lockdown to “flatten the curve” of the coronavirus epidemic, public health officials pointed to trust as a central justification.

      Swedes, they said, could be trusted to follow social distancing protocols without any mandatory orders.

      And, to a large extent, Sweden seems to have been as successful in controlling the virus as most other nations. The country’s death rate of 22 per 100,000 people is the same as that of Ireland, which has earned accolades for its handling of the pandemic.

      But on one warm spring day in Stockholm last week, there was little evidence that people were observing the protocols. Young Swedes thronged bars, restaurants and parks, drinking in the sun.

      While other countries were slamming on the brakes, Sweden kept its borders open, left schools in session and placed no limits on public transport. Hairdressers, gyms and some cinemas have remained open.

      There goes that RACIST NYTimes again.

      1. baffling

        “Citing a Chinese study and Reuters ”
        as i already pointed out in another post, bruce, you are simply an idiot or illiterate if you still stand behind your reuters post. it actually contradicted you argument. then again, you are really trolling so what does that matter to you. you simply send in inaccurate comments and then move on to the next page.

        1. Bruce Hall


          Sorry you dislike Reuters so much. The article merely reported that initial results were inconclusive and that more study (12-18 months just like hydroxychloroquine?) was needed.

          Why are you so against one drug and so excited about another experimental drug that hasn’t even been approved for human use by the FDA (which hydroxychloroquine has)? Should we be following the money? Or is this just you being fixated on Trump?

          pgl says its not the administration of the drug that has worked so well for the Turks, it’s that they have a higher per capita testing rate. Gee, that makes sense. Take the test and get well. Don’t worry about taking a medication that appears to work. He seems to have the same Trump fixation disorder… when none of this is about Trump.

          1. pgl

            “pgl says its not the administration of the drug that has worked so well for the Turks, it’s that they have a higher per capita testing rate.”

            I certainly did not say this at all. You are taking words way of context and stringing them together like the dishonest POS that you are. Which is sort of funny as you have no ability to actually read own your links. Dishonest and dumber than a rock. Bruce Hall.

          2. baffling

            “Sorry you dislike Reuters so much.”
            bruce, my like/dislike of reuters has nothing to do with it. i responded to you in another post, and you did not address my criticism. let me point out the middle paragraph of the three paragraph statement from reuters:
            “The authors of the study warned that interpreting the trial finding is limited as it was stopped early after they were unable to recruit enough patients due to the steep decline in cases in China.”
            the clickbait and your comments implied the medicine was a failure. that is not true. you were making a disingenuous argument.

            “Why are you so against one drug and so excited about another experimental drug…”
            now lets separate your partisanship with science. i am not in favor of hydrochloroquine because there is no evidence that it is an effective therapeutic against coronavirus. it was developed to treat a parasite disease, not a virus. if one were to do initial screening, there is very little to identify this as a possible coronavirus treatment, other than larry ellison planting the bug in trump’s ear. musk also planted the bug, because the drug helped him treat his falciparum, which is……….a parasite disease.
            on the other hand, remdesivir was developed to treat a virus. while it was not effective against its original foe, ebola, in previous studies it had indicated impact on both mers and sars, both of which are caused by……….coronavirus.
            so if we are to spend limited resources developing a solution, i would rather spend it on a drug with a positive indicator through screening, rather than based on a hunch by a business man and his political friend. exactly what science are you basing your recommendation on, bruce? idiot.

          3. pgl

            “Why are you so against one drug and so excited about another experimental drug that hasn’t even been approved for human use by the FDA (which hydroxychloroquine has)?”

            Bruce Hall made this idiotic statement to Baffling just this morning. Of course he is lying about the FDA and hydroxychloroquine. His preferred treatment works against malaria but the topic is COVID-19. Brucie is also on a mission to claim re mdesivir is not effective against COVID-19 even after Dr. Fauci reported the results of the NIH which he found positive. But the FDA has not yet approved the use of remdesivir until today:

            “Gilead Sciences Inc.’s antiviral drug has been cleared by U.S. regulators for emergency use in Covid-19 patients, President Donald Trump told reporters at the White House Friday. The drug, remdesivir, has shown positive results in helping hospitalized patients recover more quickly. The Food and Drug Administration cleared the drug under an emergency use authorization”

            Yes – Bruce Hall has never had a clue. And now his dear leader (Trump) has confirmed Brucie’s incredible stupidity.

          4. baffling

            the fda has also cautioned against the use of hyroxychloroquine, due to lack of evidence supporting its application to covid as well as documented heart dangers associated with its use. but bruce, i guess this warning does not mean much to you, right? so bruce, you can lump the fda in with me as questioning the efficacy and safety of the drug. but i am sure you know more than the fda about drug use.

      2. pgl

        Gee Brucie – I decided to keep the Swedish disaster comment under Menzie’s post and not here. Just put up how Greece was a success as they did just the opposite of what Sweden. Of course you and Tucker Carlson will search for ethnic explanations. Whatever. As far as Gilead’s treatment – you shouldcheck out what Dr. Fauci said yesterday. We asked you to do so last night but it seems you cannot bring yourself to listen to someone who knows this stuff.

      3. pgl

        “Swedes, they said, could be trusted to follow social distancing protocols without any mandatory orders.”.
        OK but they your source notes this:

        “But on one warm spring day in Stockholm last week, there was little evidence that people were observing the protocols. Young Swedes thronged bars, restaurants and parks, drinking in the sun.”.

        In Bruce Hall’s world, the earth is round in the morning but by dinner time, it is flat.

        1. Bruce Hall

          pgl So, you’re not really arguing with the results that the Swedes have obtained with their approach (same death per 100,00 as Ireland), nor are you arguing with the conclusion that the Turks have regarding the efficacy of hydroxychloroquine (90% of patients showed significant improvement).

          You are upset that Bruce Hall point that out.

          Got it. TDS. Now it’s HDS.

          1. baffling

            bruce, if you compare sweden to its neighbors, finland and norway, you will find that the death rate in sweden is extremely bad. the approach taken by sweden is not safe, it is deadly. in particularly it is deadly for seniors, of whom bruce hall is a member. but since bruce is able to self isolate, this is really not a concern for him. only other seniors forced back to work. what a neighbor you must be.

          2. Barkley Rosser


            Yes, poor Ireland. I think ireland’s problem is that they are next door to UK, which had a policy like Sweden’s until their PM got the virus. Not exactly the same as Sweden, the latter’s policy more consistent. But Sweden is now in the top handful with UK, Ireland, and Belgium as among the most rapidly growing rates of infection in the world. Sorry, but Seden’s policy has turned into a disaster.

          3. Ulenspiegel

            “So, you’re not really arguing with the results that the Swedes have obtained”

            Only a math challenged person would sell Sweden as positive case.

            Are you really that stupid? Paid to be stupid? Natural?

  3. 2slugbaits

    Food and beverages purchased for offsite consumption (i.e., stuff you buy at your grocery store) were up a staggering 25.1 percent.

    The most interesting statistic in Table 1.5.1 is the drop in healthcare spending of negative 18.0 percent. On the one hand doctors and hospitals stopped nonessential surgeries and appointments. OTOH, we saw hospitals and doctors being overwhelmed with COVID-19 cases, which should have pushed up the healthcare component of GDP. Also, expenditures on nonprofits that serve households saw a 34.2 percent increase.

    1. steve

      ICUs were swamped in some places, we were real busy, but most of the money making parts of hospitals were not running or were running at greatly reduced capacity. Most surgicenters closed entirely.


    2. spencer

      I’m 78 and my wife is 76 and our Drs. appointments were canceled last month so we would not break quarantine and expose ourselves to Covid-19 in the doctors office or the hospital. I presume that is very widespread for older patients.

      Out semiannual physical in May are going to be done by phone with the doctor calling us. So the drop in healthcare may be accurate.

      I first though it was problems in the reporting system, but now doubt that.

      1. baffling

        loss of healthcare revenue has been significant with respect to elective procedures. in texas the governor was very explicit that the reopening includes the ability to conduct elective healthcare. personally i think we needed another month, as the state is still extremely vulnerable to another wave. lots of maga hatters chomping at the bit to get back out there and expose themselves to the virus. the elective procedure shutdown kept those vulnerable patients away from the virus. that will change, and i imagine we will see it flow through the cancer hospitals as covid reemerges with the reopening of the economy. nevertheless healthcare was a major headwind for gap.

      2. Wally

        I suspect that when this is behind us a lot of people will realize that much of what they ran around doing was simply not necessary.
        If we are lucky, the pace of life will slow a bit and ‘work’ will not rest on the highest altar as it did before.
        We now have cleaner air, more people in parks and out walking, less traffic, less money spent of ‘junk’, fewer meetings, relaxed deadlines and obligations…

      3. macroduck

        I would have thought some of the measurement of medical care “output” is goofy enough to cause measurement problems. ICUs may provide more or less actual welfare per dollar spent than do surgical suites, but accounting is done in dollars, not welfare. That means insurance company rules and hospital overhead expensing decisions will have a big influence on how we count medical care by component. Under normal conditions, the goofiness doesn’t cause swings in the final tally because each revenue stream in the hospital is running according to capacity, and can’t vary much. I’d expect big swings in use between various hospital revenue streams could cause distortions in reported output. Could be dead wrong, though.

  4. Not Trampis

    Is it true the SAAR rate was 0.9%?
    If so it is yet another reason to get rid of the ridiculous annualised number

    1. macroduck

      No, the seasonally adjusted ANNUAL rate (SAAR) was -4.8%. The seasonally adjusted quarterly rate was -1.2%. FRED doesn’t have the unadjusted figure and I’m too lazy to look further.

      The fact that one is -4.8% and the other -1.2% doesn’t strike me as a reason to do anything in particular. The fact that GDP dropped instead of rising or dropped a bunch instead of a little bit doesn’t seem a very convincing reason to stop annualizing. Methinks you already cherish the notion that annualized changes are bad and took this opportunity to say so.

  5. Edward Hanson

    Professor Hamilton

    Thank you for your continued recession indicator. If you have the time, could you describe the factors of Government contribution. All we here is the extreme Federal spending through debt. But my guess is state and local factors have taken a similar hit, so all in all, it adds up to the a small contribution.

    And a question outside your indicator. As an imminent Economist, would you please describe your best estimate of the type of recovery in popular vocabulary.

    A V-shape, a J-shape or an L-shape, or in any words you would like to use.


    1. pgl

      Ed – we have been over this before. Go to and look for Table 1. Real Gross Domestic Product and Related Measures: Percent Change From Preceding Period

      You will see that government purchases rose by a mere 0.7% on an annualized basis. State spending was up but only marginally.

      Come on Ed – you have been here enough to know how to access reliable data.

      1. macroduck

        Not to mention that state and local spending follows revenue with a lag.

        Mostly, states and locals spend according to their adopted budgets until a political decision to slow spending is made. They end up running down reserves. It would be hard for G to turn negative in a quarter in which revenues started in reasonably good shape and then collapsed late in the quarter.

        Second quarter state and local spending is likely to show a much bigger drag from the pandemic than did Q1 spending.

  6. pgl

    This must be why the Trump sycophant disinformation parade is in high gear:

    President Donald Trump won’t accept the fact that Democratic candidate and former Vice President Joe Biden is beating him in the polls.“I don’t believe the polls,” Trump said during an interview with Reuters on Wednesday. “I believe the people of this country are smart. And I don’t think that they will put a man in who’s incompetent.”
    Wait – what? We did put a very incompetent man in the White House 3 ½ years ago. Time to blame the Bidens for the COVID-19 mess! MAGA!

    1. baffling

      it all depends on the recent allegations made against biden. as i have argued in the past, if the democrats had groomed a credible young person, like obama, this election would be a blowout. but if it becomes another election of damaged goods, all bets are off, and that is to trumps advantage.

        1. baffling

          rage, democratic candidates do not get the same cult like following that trump has over his followers. trump could shoot a guy in broad daylight on 5th avenue, and his followers would still vote for him. the same cannot be said for most democratic candidates and voters. they will not vote trump, but simply will not vote. trump does not have that disadvantage.

          1. The Rage

            Sorry, but nope. Nobody cares about some stuff from 27 years ago in Covid 19 era especially. You don’t need a cult to laugh at something like this

        2. pgl

          Maybe so but many have been asking Biden to address this allegation. I think it is all Trumped up (as in false) but he needs to face it heads on and then move on. It turns out he will be a guest on Morning Joe where he will field questions about this. Yea – he probably rubbed her shoulders at one point which is no big deal. But her other allegation strikes me a very fake.

    2. macroduck

      So, I’ve heard from my secret non-fake alt-right network news source that the Covid-19 virus was created in Burisma’s secret Ukrainian laboratory (emphasis on “bor” so it sounds like Karloff). Hunter was inoculated so he could carry the virus to China and Italy and most particularly to California and the Left Coast generally.

      Why has Giuliani spent so much time in Ukraine? Look at the guy. Imagine him in a lab coat. Imagine him giggling and rubbing his hands together. He says “Biden investigation” but he really means “Biden experiment!”

      This is Rudy’s “plan B” after taking over the U.S. government by winning the presidency failed. Trump is now doing what Rudy wanted to do. All of Rudy’s public behavior is a sham, meant to embarrass Trump – and a good job he’s done of it, too! His real agenda is to show the world its error in picking a loud, silver-spoon-sucking, bullying, self-aggrandizing reality TV host and tax cheat as the U.S. experiment in authoritarian rule instead of a loud, self-aggrandizing, bullying megalomaniac.

  7. pgl

    Morningstar on projected Remdesivir 2021 sales:

    “This raises our 2021 assumption for sales of the drug to more than $2 billion, with much smaller sales assumed in 2020 (less than $500 million) due to the extensive donations of Gilead’s initial drug supply.”

    So much missing so little time. Cost of production? Cost of marketing? Morningstar has told potential investors nothing about expected profits. I have no idea who this woman is but I bet even CoRev could provide a more informative forecast.

    1. Bruce Hall

      pgl, so, following the money, it’s easy to see why you want Remdesivir to be the answer even though there is scant evidence that it is a better solution than hydroxychloroquine. It’s an opportunity to invest and make money on mass hysteria.

      It would be nice if Remdesivir proves to be an answer or at least part of the answer, but knocking a less expensive alternative for the sake of making a killing in the market (yup, pun) is rather low.

      Meanwhile: Remember, testing isn’t the cure; it’s just useful in identifying who needs the cure.

      1. pgl

        “t’s easy to see why you want Remdesivir to be the answer even though there is scant evidence that it is a better solution than hydroxychloroquine. It’s an opportunity to invest and make money on mass hysteria.”

        God – you are a dumbass. #1 I already noted I am not a Gilead shareholder so your childish little insults here only prove you cannot read. But whatever.

        Scant evidence? I see you have not listened to what Dr. Fauci said about those successful clinical trials. Gilead’s CEO noted today that this treatment may get FDA approval soon. Of course the only thing that impresses an idiot like you is the Fox and Friends seal of approval.

        Come on Bruce – you have proven conclusively that you are the dumbest person ever. So no need to bark like a retarded dog.

      2. pgl

        “It’s an opportunity to invest and make money on mass hysteria.”

        Never has there been so much disgusting disdain for human life and sheer stupidity in such a short sentence. People not wanting to check a disease when they do to work is mass hysteria? 2slug has invited you to take a job at Tyson only because he knows full well you are too much of a coward to walk anywhere near a food processing plant.

        But Gilead making money? We know you are incapable of reading an Annual Report or listening to an earnings call so permit me to make this simple for our Trumpian dumbass. Gilead is not charging anything for its treatment this year. And the CEO told shareholders that the cost of R&D and production this year will likely reach $1 billion. Only a rapid barking retarded dog could call this making money on mass hysteria.

  8. Steven Kopits

    Oil consumption is a reasonably good approximation of GDP in real time. Total product supplied — that is, all refined products delivered from refineries into the field to retailers, for example — is down 30% on a four week moving basis. As a result, I think it plausible that GDP will be down a similar amount during the same period.

    Still, apparent US demand for total products is up 2 mbpd (+10% of ordinary consumption levels) over the last two weeks, and I expect it up about 2 mbpd in the coming week, to judge by much increased traffic locally. So, we are still way under water, but for the moment, are heading up quickly.

    Below are my bullets from this week’s Department of Energy numbers:

    – Demand, although still well off last year’s levels, has begun to visibly rebound.
    – In absolute terms, crude inventories rose at a pace of 1.5 mbpd; total inventories, including SPR purchases, were rising at the pace of 1.7 mbpd. Crude imports were effectively at historical lows. A more typical import level would have added 0.5-1.0 mbpd to crude stocks. Product exports were range-bound. Thus, the underlying pace of inventory gains appears to be in the 2.3 – 2.7 mbpd range. By extrapolation, global inventories may be building by 12 – 16 mbpd, which is a marked improvement over the last few weeks. Notwithstanding, a flotilla of Saudi crude is reportedly heading to the US, and this may spike crude imports and inventories in coming weeks.
    – Interestingly, refined product inventories were all but flat this week. Reduced refining and recovering demand has stemmed the build in product inventories.
    – US nameplate crude storage is 61% filled, with 14 weeks of capacity remaining at the current fill rate of 1.3 mbpd. This is much better than last week, but again is driven by an unusually low level of net crude imports, as well as limited SPR purchases.
    – Demand has begun to rebound. Total product supplied was up 1.6 mbpd compared to last week, and 2 mbpd compared to two weeks ago. Nevertheless, demand remains down 30% compared to last year
    – Apparent gasoline demand is also rebounding, up 0.5 mbpd compared to last week, 0.8 mbpd compared to two weeks ago. Still, gasoline consumption remains down 45% compared to last year and represents 77% of the total drop in demand.
    – The futures curve remains largely unchanged compared to last week, with a marked contango and a notable incentive to store.

    If you would like to be on the distribution list, send an email to

    1. macroduck

      Calculated Risk ( is tracking a handful of short-term indicators that strongly reflect the influence of quarantine efforts. The travel indicators – hotel occupancy and TSA data – show a very slight uptick in the latest data. Could be noise, but could be the lifting of social distancing rules in a couple of states. That would fit with an increase in liquid fuel demand.

      Two factors, apart from the level of infection, are likely to drive economic performance in the short run. One is official quarantine rules. The other is public response to any lifting of quarantine rules. Recent polling shows the public is in favor of maintaining social distancing efforts. (Fauci is winning.) A handful of states are easing shutdown rules, so we should expect fuel consumption, hotel occupancy, diner traffic and TSA numbers to pick up. How much they will pick up relative to what is possible under eased restrictions depends on public response to the easing.

  9. baffling

    over 30 million unemployed and 5% contraction in gdp. can you say WORST ECONOMY EEEEEEEEEEVERRRRRR donald? cuz you and your followers own it. along with biggest market drop ever. can we really afford 4 more years of this incompetence? we are starting to look like greece.

  10. pgl

    The Mayo Clinic told Pence he needed to wear a mask but he didn’t. I guess the wife had to find an excuse for her husband:
    “As our medical experts have told us, wearing a mask prevents you from spreading disease. And knowing he doesn’t have COVID-19, he didn’t wear one,” she said on “Fox & Friends.”

    “It was actually after he left Mayo Clinic that he found out they had a policy of asking everyone to wear a mask,” the second lady continued. “So someone who’s worked on this whole task force for over two months is not someone who would have done anything offend anyone, or hurt anyone, or scare anyone.”

    Of course what she said about the clinic is not true. Pence was told before he went into the clinic not afterwards. But forget Pence is such a wuss that he has to have his wife lie for him. One could think he would have the common sense to know this is policy without being told.

    1. spencer

      Can not get over the photo of Pence with about a dozen other people –including a patient — and every one else had on a mask. It takes some kind of wilful ignorance to not see that you are the only one without a mask.

      1. pgl

        Pence defended himself by saying he and his staff all get tested every day. Well then why can’t the rest of us get tested at all? Pence is supposed to be in charge of this but it seems he protects himself and leaves the rest of us with nothing.

    2. baffling

      “As our medical experts have told us, wearing a mask prevents you from spreading disease. And knowing he doesn’t have COVID-19, he didn’t wear one,” she said on “Fox & Friends.”
      this does not apply to medical hospitals. which is why there was so much concern from medical personnel who could not obtain ppe during the peak of the crisis. this is either an intentionally misleading statement by this lady, or shows her ignorance of the situation at hand.

  11. pgl

    Gilead Sciences had an interesting earnings call yesterday:

    Gilead expects to spend up to $1 billion on coronavirus drug this year, will donate 1.5 million vials – CEO says Gilead ‘could charge for’ remdevisir, but donating entire supply through early summer ‘is the right thing to do at this time’

    The bulk of Gilead’s earnings call with investors focused on remdesivir and the company’s view on how the pandemic may impact sales of its HIV drugs in the second quarter. Executives said that “the potential range” of its remdesivir development costs could reach $1 billion in 2020. Analysts also answered questions about the potential cost for remdesvir if it receives marketing approval or an emergency-use authorization from the Food and Drug Administration. “Under the emergency-use authorization, one could charge for the product,” CEO Daniel O’Day said on the call. “We made a decision, as you know, to donate 1.5 million vials, which is the entirety of our supply through the early summer.” Gilead has told investors that it plans to have more than 140,000 treatment courses of remdesivir prepared by the end of May. O’Day later said donating the investigational therapy “is the right thing to do at this time.”

    OK – I get that Bruce Hall is too stupid to know what an earnings call even is but he thinks Gilead is somehow make big bucks on incurring all these expenses and not charging anything for remdesivir this year. Go figure. But also note that he refers to our concerns about potentially dying from COVID-19 as “mass hysteria”. Yea – he is both this dumb and this disgusting.

    1. baffling

      analysts early on pointed out that remdesivir will not impact the bottom line of gilead, even if it is found to work, in any meaningful way. except for perhaps cost.

      1. pgl

        That’s true especially since Gilead has decided to not charge for it this year. And Bruce Hall accused them of trying to profit off the “mass hysteria”. Yes – he called our concern over something that has already killed 65000 Americans is nothing more than hysteria. He also said just today that his snake oil received FDA approval (it has not) and that Remdesivir has not (it has). Is there any doubt who is the Stupidest Man Alive?! Profiting off of something you are giving away – huh?

  12. spencer

    Note that the drop in imports made a major positive contribution to real GDP growth. I had been expecting that.

    But, a major share of the improved trade balance stems from oil exports that fracking made possible. Actually the oil trade is about in balance as oil imports have contracted and export grew. But as low prices cause the supply of fracked oil to collapse, it will show up as a major drop in oil exports. So you can no longer count on trade continuing to make a positive contribution to real GDP growth.

  13. Johnny

    James, thanks a lot for your post, I am truly glad that you are back.

    Here in Germany, everyone is certain that the cure is worse than the disease.

    The rebound will come. A tremendous investment opportunity, James, please hear me.

  14. Michel

    Merci James,

    With the model taken from your 2009 paper on the GFC economic recession, on GDP and oil consumption (log/log), looking at recent independently forecasted figures of GDP and oil for the whole world by IMF and IEA are bizarre too …
    See my blog : Lepetit M. (2020 d.) – IMF & IEA GDP & OIL 2020 forecasts : Business As UnUsual – 19/04/2020

    And I am glad to inform you that A. Bergeaud and I have just made available 16 historical data series on oil consumption, for those who want to analyze the “Longue durée” so cherished by Fernand Braudel :
    The research project CH.DUPIN (Collection of Historical Data on the Uses of Petroleum International Network) aims at gathering historical data on oil consumption for many countries.
    The current dataset contains yearly information on oil consumption, oil consumption per capita and oil consumption per unit of GDP for 16 OECD countries from 1890.
    Très cordialement,

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