Update: 4th Quarter GDP Report
The 3rd Quarter GDP number was released a couple of weeks ago, highlighting a 0.3% decrease in total goods and services produced in the US, which included a 3.1% drop in consumer spending, the most in 28 years. Considering the fact that consumer spending accounts for almost 70% of GDP, that got us thinking:
How severe, in real inflation-adjusted terms, was this drop in consumer spending compared to other recessions?
How will this number, which is likely to get worse in the 4th Quarter (see October Retail Sales), affect GDP growth in the near future? How drastic will the economic downturn be in this coming quarter?
Well, we compiled some data from the Bureau of Economic Analysis and came up with this. Presented here is a historical comparison between Personal Consumption Expenditures (consumer spending) and Gross Domestic Product over a 40-year time frame. Click on the chart for an expanded view.
So, based on this historical perspective, are we looking at a 3-4% decline in GDP this coming quarter? And will it get any worse? If it’s anything like the recession in the early 80’s, we have a long way to go. Only time will tell.
See Raw Data (Excel File).