Chart of the Day: GDP Was Up 4% In the 4th Quarter

Real GDP increased at an annual rate of 4 percent in the fourth quarter of last year. Normally this would be a very respectable growth rate, but in the COVID-19 era it’s kind of meaningless. Here’s a different way of looking at it that tells a more meaningful story:

If GDP had continued growing at its rate of the past decade, it would have reached $19.5 trillion last quarter. Instead it ended up at $18.8 trillion, which means we’re $700 billion below where we “should be” in the absence of any pandemic effect. This is the amount we need to make up to get back on our old growth path. It’s also the hole that needs to be filled with additional consumer spending.

So how much extra consumer spending do we need to close this gap? We just passed a $900 billion bill and personal savings are still about $1 trillion above their normal level, which means we have nearly $2 trillion in potential extra spending available over the next few quarters. That might be enough on its own to get the economy back on track, though I’ll leave the final word up to economists with better analytical chops than me.

Needless to say, there’s not much chance of this extra spending actually happening until vaccinations are widespread and the economy opens up fully. Call it Q3 at the earliest. In the meantime, we may not need a lot more spending aimed at stimulating the broad economy, but we do need to spend money providing help where it’s needed. That primarily means the unemployed and local governments, both of whom have suffered the brunt of lost income. Let’s get to it.

IT'S NOT THAT WE'RE SCREWED WITHOUT TRUMP:

"It's that we're screwed with or without him if we can't show the public that what we do matters for the long term," writes Mother Jones CEO Monika Bauerlein as she kicks off our drive to raise $350,000 in donations from readers by July 17.

This is a big one for us. It's our first time asking for an outpouring of support since screams of FAKE NEWS and so much of what Trump stood for made everything we do so visceral. Like most newsrooms, we face incredibly hard budget realities, and it's unnerving needing to raise big money when traffic is down.

So, as we ask you to consider supporting our team's journalism, we thought we'd slow down and check in about where Mother Jones is and where we're going after the chaotic last several years. This comparatively slow moment is also an urgent one for Mother Jones: You can read more in "Slow News Is Good News," and if you're able to, please support our team's hard-hitting journalism and help us reach our big $350,000 goal with a donation today.

payment methods

IT'S NOT THAT WE'RE SCREWED WITHOUT TRUMP:

"It's that we're screwed with or without him if we can't show the public that what we do matters for the long term," writes Mother Jones CEO Monika Bauerlein as she kicks off our drive to raise $350,000 in donations from readers by July 17.

This is a big one for us. So, as we ask you to consider supporting our team's journalism, we thought we'd slow down and check in about where Mother Jones is and where we're going after the chaotic last several years. This comparatively slow moment is also an urgent one for Mother Jones: You can read more in "Slow News Is Good News," and if you're able to, please support our team's hard-hitting journalism and help us reach our big $350,000 goal with a donation today.

payment methods

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate