GDP Prediction

Simple math problem, perhaps. To predict GDP for the 2nd quarter of 2020, a full 13 weeks of economic lockdown, with minimal easing as of this date.

GDP for the 4th quarter 2019 might mimic the first 10 weeks of 1Q2020. That had growth of 2.1%. The last 3 weeks of the 1st quarter was low enough to drag the whole quarter into a 4.8 decrease. (By the way, the Fed Reserve of Atlanta estimated a 1.0% drop. These GDP estimates are often revised as more detailed info is input. But we’re using BEA numbers.)

Simply solving for x, we can predict what GDP might be for the 2nd quarter assuming our experience throughout the April - June timeframe is similar to the last half of March:

((10*.021)+(3*x))/13 = -.048

Therefore, based on available info, 2nd quarter of 2020 GDP will be -27.8%.

Fortune magazine reported that the range would be -8% to -15%. Morgan Stanley projects a -38%. As reported in Business Insider, the Bloomberg organization predicts -25%.

Since you’re living the 2nd quarter as this is written (we’re one-third through it), you know the impact on your business. And anyone’s prediction needs to be a broad range as to when the whole economy will rebound and you can have confidence that your customers will have financial security enough to spend.