No, GDP Didn’t Plunge “32.9%” in Q2, it Plunged a Still Terrible 9.5%: Time to Kill “Annual Rates”

A perfect quarter to look at the absurdity of reporting “annual rates” in the headlines.

By Wolf Richter for WOLF STREET.

This morning, we were confronted with horrible news, which we’ve been expecting all along, but this news, though truly horrible, was also a result of something called “annual rate.” What we saw in the headlines was that GDP, adjusted for inflation, collapsed by “32.9%” in Q2.

That should have been reported as “32.9% Annualized.” It was an “annual rate,” meaning that the Q2 drop was essentially multiplied by 4 (with adjustments) to obtain a theoretical figure that shows what GDP for the whole year would look like if it kept plunging like this for four quarters in a row. But that is unlikely. The Bureau of Economic Analysis, which reported this GDP data this morning, also reports – deeper down in its data – “not annualized” figures. And not annualized, GDP fell 9.5% from Q1:

This 9.5% plunge in Q2 from Q1 was still the steepest decline in nearly 70 years of quarterly data, which began in 1947. There was no quarterly data during the Great Depression, only annual data. But for the whole year of 1932, GDP plunged 12.9%, sandwiched between several years in a row of steep annual declines, and the total decline over those years was terrible. So, we’re not there yet.

And no, consumer spending didn’t collapse by “34.6%” – that was the “annual rate” in Q2, meaning the actual drop multiplied roughly by four. “Not annualized,” consumer spending dropped 10.2% from Q1 and by 10.7% from a year ago:

Consumer spending accounted for 67% of GDP in Q2. And that 10.2% quarter-over-quarter drop – and 10.7% year-over-year drop – was gigantic as far as drops in consumer spending is concerned. But it was propped up by stimulus payments and unemployment payments, including the $600 a week in federal unemployment supplements, and people did spend this this money.

The decline in consumer spending was driven by spending on services, which plunged 14.7% year-over-year, including a full-blown collapse in spending on travel, hotels, food services, and personal care such as hair salons.

Goods sales fell only 1.8% year-over-year, as grocery sales surged because people switched to eating at home.

Investment in residential and non-residential structures, and in equipment and intellectual property products plunged 17.9% year-over-year. As businesses cancelled or delayed investment decisions, there were huge drops in investment in nonresidential structures and equipment.

Exports, which add to GDP, plunged 23.7% year-over-year. Imports, which reduce GDP, plunged 22.1%.

Federal government spending surged 6.7% year-over-year. Defense spending rose 4.0% and non-defense spending surged 10.9%, driven by the bailout and stimulus money being distributed.

State and local government spending ticked down 0.7% year-over-year. These governments are grappling with a historic plunge in revenues, and are trying to figure out how to get through this. But they too are benefiting from federal government support. Without it, the drops would have been steeper.

So it was a horrible quarter, but it wasn’t a 32.9% collapse – that 32.9% was an “annualized” theoretical figure.

“Annualized rates” are misleading and should be banned from headlines.

The US is one of the few countries in the world to report GDP data in the headlines on an “annualized” basis. It’s more exciting because it increases the figures.

In Europe or in Japan, you might read that during a good quarter, the economy rose 0.5%, and that sounds pretty puny and it’s hard to construct compelling headlines out something this small. In the US, given the same growth, you’d read that the economy grew 2.0%, which sounds a lot better, but is the same thing.

People who just see the “annualized” figures get the wrong impression. “Not annualized” figures are reported in all economic releases, but they’re deeper down, not designed for headlines.

I implore the government entities that decide this to start the process of switching it around: Report at the top of the data release the “not annualized” figures, and deep down, hidden in the tables and details, have a column for annualized figures, for those that want them.

And keep the rest of the people – who have better things to do than digging through 20 pages of GDP data on a Thursday morning – properly informed.

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  123 comments for “No, GDP Didn’t Plunge “32.9%” in Q2, it Plunged a Still Terrible 9.5%: Time to Kill “Annual Rates”

  1. Mr Wake Up says:

    Was looking for some truth today.
    Mission accomplished

    • Lee says:

      Well it’s easy to understand why: the stupidity of a lot of Americans has risen by over 500% in recent years.

      • Truckman says:

        Is that annualized stupidity, or the quarterly rate?
        Is it ‘seasonally adjusted ‘ ? People are a lot dumber in summer ;)

        • Lee says:

          Well its probably related to the increase in the number of people being ‘educated’ at universities and colleges in the USA.

      • Lee says:

        And it looks like people in Victoria are not far behind:

        “Home checks on people with the virus on Thursday found one in four were not home despite being under orders to self-quarantine.”

        So we have lots of people with active virus cases out running around probably spreading the virus in the community.

        Any wonder why the number of cases here is increasing?

        • Steve says:

          The only answer to this is to quarenteen then like they do with incomming travellers and charge them the same $3000

      • Sit23 says:

        Don’t forget that the stupidity criteria has had to be changed over the years to fit the desired stupidity levels of those in charge of measurements. I note putting horseshoes on the wrong way round, and buying digital currencies are both gone.

    • Unamused says:

      Was looking for some truth today.

      Tell me all things false are true,
      Bitter sweet, that fools are wise;
      I will not doubt nor question you;
      I am in a mood for lies.

  2. MiTurn says:

    “So it was a horrible quarter, but it wasn’t a 32.9% collapse – that 32.9% was an “annualized” theoretical figure.”

    In baseball, your effort here to clean up a mess (in reporting) would go down as a save! This is why I read your site daily. You’re a bright light in the fog of the “narrative.”

  3. Danno says:

    As always, thank you for the WHOLE story, not just the fear driven narrative.

    • Wisdom Seeker says:


      One suggestion: Why not simply post the quarterly GDP in $T, forget about the percent change stuff, and let people see both the numbers and seasonality? Plot it like a stock chart. Or to remove seasonality, just graph the trailing 4-quarter sum (“TTM”).

      As a bonus, with that system you can plot the revenues of the Giant 5 (or whatever small group of megacap corps) as a share of said GDP … as a function of time … and highlight just how excessive their hold is on the economy, government etc.

      Toss in a per capita and you have a measure of standard of living too. Did you know US GDP per capita is already $65,000/year? Are you getting your share?

      It’d also be quite informative to plot GDP not in nominal dollars, but in ounces of gold or other quantities that remain useful over long periods of time (loaves of bread?). Makes a direct physical comparison to the 1929-1932 period, back when there was a gold standard in place.

      • Jit Hoong Lim says:

        % change is the right way to look at numbers as oppose to using absolute numbers. Back in 2000, GDP was 10 T and a 5% drop means a 500 Bil in GDP. Today a 500 Bil drop in GDP is only half of 5% as GDP has grown to 20 T. In fact using Year on Year % change is much better approach as will get less volatility from one period to another. Once plotted on a chart, YOY % chart allows you to see if trending patterns. Unfortunately, media and conventional wisdoms from analysts love to use % change from period to period (i.e. Month-to-month and Quarter-to-Quarter).

        One thing you are absolutely right about it is tto use GDP per capita. As our population is declining over time, what really matters is on a per capita basis.

    • Álvaro says:

      Err… you *should* be afraid. It doesn’t matter what the actual number is.

  4. MonkeyBusiness says:

    #BestDepressionEva continues.

    I would trust numbers coming out of AMD, TSMC, etc over the GDP report.
    Customers are flush with money, buying electronic products with no end in sight. Their entertainment budget seems bottomless, and that’s all you need to know about the economy.

    The coronavirus is not a hoax, but the “depression” is a hoax.

    • Matt says:

      Definitely overdramatized though! How many layoffs now? All in the name of a mortality rate of 0.5-1%. Print print print! Stay inside where it’s safe! Do as I say not as I do!

      • MonkeyBusiness says:

        Layoffs don’t matter if you are getting paid more.

        And it shows through the entertainment budget. Also people don’t have to commute as much, that should save them some money as well.

        Just wait a couple of months till forbearance runs out. Most people will say “No habla Ingles!! We thought forbearance is forgiveness”. A very familiar excuse used during the mortgage crisis.

      • Weary Patience says:

        It is not just the mortality rate that is problematic. It is the huge amount of resources (physical and personnel) required to aid those who develop harsh cases. The resource drain causes second order effects – people who get hurt in accidents that would otherwise survive are denied care or receive subpar care. Car wrecks, chainsaw/yardwork accidents, heart attacks, strokes, emergency surgeries, etc are all put at increased risk of mortality.

        As someone who recently tested positive, was completely asymptomatic, and two weeks later tested negative… I stayed in isolation, wore a mask inside common areas of the household, used a separate restroom, etc. and am now left wondering did anyone else I came into contact catch it from me? Will they be ok? Will I? Lots of people with no or mild symptoms are also registering issues with lung, kidney, heart, and brain damage. Really hoping I get extremely lucky and manage to avoid all of the above.

        • MarMar says:

          Thank you! I am very tired of this “mortality rate of only X%” talking point. We are also seeing lots of people with chronic issues after COVID, which just by itself is going to have long-term economic impacts.

        • Lee says:

          I really doubt that any of statement with regard to people needing emergency treatment and being denied proper care in the USA is happening with regularity, if at all.

          And with the lockdown in many areas of the USA going on in conjunction with lots of WFH being done, I can pretty much state that the number of people being injured or killed in auto accidents in the USA has fallen way below normal.

          More online shopping has also resulted in fewer trips in cars as well and resulted in fewer accidents, injuries, and deaths.

          Lockdowns and isolation has probably resulted in fewer cases of normal flu and ther types of respiratory death as the case for tramsmission is not there.

          However, there is no doubt in my mind and the stats in a few years will also show a juge spike in death from suicide, heart attacks, heart disease, diabetes, cancer, and other preventable deaths as people put off care as a result of being scared of going to hospitals and doctors for treatment.

          In my own case I was told by the doctors handling my case that if my conditions were to worsen to: “DO NOT GO TO THE EMERGENCY DEPARTMENT. CALL THE CLINIC FIRST.” And this was during the first lockdown here in Melbourne when the chance of community transmission was low, but hospital transmission was much higher.

          The number of ER cases and patients (other than the few in ICU and hospitalised with the virus) in Australia has fallen off a cliff during the past few months.

          I was supposed to have a face to face doctor’s appointment later this month to check on my progress, but with the huge increase in cases here in Melbourne there is no way I’m going to a doctor’s office. The appointment will be done by phone and hopefully that will take care of it………………

          The only way I’m ever going to the ER or a doctor’s office in the near future is if I’m in really, really, really bad shape.

          “Bad days” won’t prompt me to even contemplate it.

        • Weary Patience says:

          @Lee I’ve heard of several no-room incidents in my state – people have had to travel for hours by ambulance to another portion of the state, or even to a neighboring state. We just had a new record count of cases within the last 24hr too. Unfortunately, people here aren’t taking the situation very seriously. LOTS of people out and about, and even in areas with “mandates” for mask usage, probably only 30-50% comply. I fear it’s going to get really messy and have to hit really close to home for some to stop being in denial. I tried to be careful (wear mask, keep distance, wash hands) but still managed to acquire it. Car accidents seem about on-trend for my immediately local area. Shootings are up, unfortunately. Already had more than the last several years combined.

        • Lee says:

          “…travel for hours by ambulance to another portion of the state, or even to a neighboring state.”

          So they got the care they needed then.

          “Shootings are up, unfortunately. Already had more than the last several years combined.”

          So which Democrat controlled city do you live?

          Maybe more defund the police is necessary there…………..

        • Just Some Random Guy says:

          “More online shopping has also resulted in fewer trips in cars as well and resulted in fewer accidents, injuries, and deaths.”

          My auto insurance company sent me a check for about $100 to account for this. Fewer accidents, fewer claims, cheaper insurance for everyone.

        • Weary Patience says:

          @Lee, my point is we’re not done on our climb in cases and already what was a 30 minute ambulance ride is now a 3+ hour one.

          With regard to “democrat controlled city” – nope. Rural area.

          Stresses are building in more ways than one.

      • Sit23 says:

        Better still. Print USA daily weekly or monthly death numbers with trailing of some sort as well for the last 5, 10, or 20 years. Very simple. No adjustments. Just a series of lines going up, across and down in an accurate manner.

    • Jon says:

      Actually, you have good point. Both AAPL and FB is all up after hours.

      I don’t see any decrease in spending. Grant it that it’s all money given by govt.

      I can see the govt would keep printing more and more money to keep the economy affloat.

      A lot of people would be on unemployment for long time

  5. LifeSupportSystem4aVote says:

    What was the GDP drop for Q2 year over year?

    • Wolf Richter says:

      nearly the same, and rounded to one decimal, it was the same.
      9.49% QoQ
      9.54% YoY

      • LifeSupportSystem4aVote says:

        Thank you, Wolf! Appreciate your hard work, wisdom and truth (all of which are rapidly becoming nonexistent in the current times).

  6. Stephen says:

    Negative GDP is ALWAYS bad. In a world with 7.8B people, modest growth at minimum is needed to keep the thing floating – unless we return to some type of hunter/gatherer mode where the concept of GDP has no real context.

    • Traveler from 2151 says:

      Infinite growth on a finite planet is absurd. Making it into a dogma is a farce. Population will go down either gradually or suddenly. Our technological level limits further growth. All previous civilizations have overreached their complexity or energy limitations and collapsed. This time is not different, Corona is just hastening the transformation. Society will simplify, decouple, and survive, and a new paradigm will emerge. Hopefully better than suicidal consumerism.

    • Lisa_Hooker says:

      Exactly. Hunter/gatherer mode is in full swing by the 1% in the equities “markets.”

  7. NARmageddon says:

    How much of the Q2 GDP was financed by new debt spending? Or in other words, how much would GDP be if not for new debt and the 3T of new debt monetized by the Federal Reserve, a chunk of which has already been spent.?

  8. Paulo says:

    Simple fix:

    On the way up use the annualized rate. On the way down, use the quarter rates. That way everyone feels better and continues to buy more stuff (on credit).

    Shoot, let’s do it with all stats… unemployment, house sales, health metrics…….

    • Wisdom Seeker says:

      Genius comment!

      Put that on your job application to join the next Administration!

  9. Brant Lee says:

    If Congress is going to pass another stimulus for unemployment, they need to do it before everyone has to apply again, which will be a kluster-nut and cost untold wasted millions to process again. The third quarter is most likely going to be a beauty also, regardless.

    And did the unemployment numbers go up another million this week raising to about 33 million in total?

    • Wisdom Seeker says:

      Re “kluster-nut and cost untold wasted millions to process again. ”

      Are you kidding? Think how many otherwise-unemployed government officials can get paid to process that next round of claims!

      At this point we need to do everything humanly possible to employ everyone in any way possible, so everyone has some basic human dignity about earning their keep, and retains their sense of shared responsibility.

      Then we can rebuild.

  10. The Fed’s money pump is working, maybe by today’s close stocks will be back to even. It comes to be that investors are considering this number will be the worst of it, and is there any reason not to think so?

    • Ruthless Gangbuster says:

      Maybe the worse headline number but the pain is only beginning. Just wait for a historic crash, the Fed cannot stop it either. how does this site work, do I have to type my detail every time I post??

    • Phoenix_Ikki says:

      If I am a betting man, I would bet the farm market will pare down on the loss or even up by the end of today. Just waiting for one positive headline to trick the algor into the other direction again. The 32.9% caused unintended reaction for it to swing the other way but it will swing back just as fast.

      • sunny129 says:

        Fight between DOVISH Fed vs REALITY backed by Covid 19!

        I am swing trading both ways. I expect bad news of some sort every Thursday AM of every weej just like the last qtr!

        • Phoenix_Ikki says:

          Good call, with this insane market, it can go either way up or down fast.

          Once again, too bad I am not a betting man cause as I predicted market recoup some of the loss and only down 200+pts despite this kind of news and outlook. Broken record, broken market..sure do feel like ironclad optimism is here to stay for a little while longer.

  11. Ruthless Gangbuster says:

    Still total disaster considering economy was open 1st May & massive stimulus of nearly twice peoples wages, only April was total lockdown, so take that into context, 10% loss of GDP in a quarter, massive stimulus which has to end & 2 months of an open economy, hell most states didn’t even do a lockdown. These figures are a disaster. Until you unravel all the details the figure itself hides how bad it is, even if the figure is a historic collapse :)

  12. gorbachev says:

    Good work.Wolf.

    If 50 million people do not get a paycheck this week,

    how is that going to work.

    • KurtZ says:

      They cover up that number too.

      GDP metrics in a country that doesn’t make anything , just financilization and grifting… A service based economy?

      GDP is a stale joke

      • Wolf Richter says:


        Most of what YOU, yes you, consume are services, including housing, utilities, health care, your communication services and TV, including internet connection, smartphone (other than your physical phone, and that is just a paperweight without software and connection), the services needed to post this comment (communications, software, etc.), transportation services (such as flights), hotel services, getting your hair cut or car repaired…

        • Mage says:

          The Middle Ages had a service based economy, eg I cut your hair you mend my shoes. It is Not conducive to technological progress or improvement in the quality of life. We are slipping into Neofeudalism, with rent extraction by dominant monopolies who have captured all institutions and politics. Interestingly, Feudalism was very stable and lasted hundreds of years, unlike various experiments with ‘democracy’ which has always been fragile and unstable.

        • Lisa_Hooker says:

          Hard to get through the day without you Wolf! But, my land-line rotary dial series 500 telephone is not a paperweight. Always works when power fails, even it the power’s off for days. Handy. Under normal conditions I do manage all my calls by cellphone.

  13. Putin on the Ritz says:

    Perhaps I’m being over cynical, but as far as Covid-19 is concerned I feel they’ve looked for an excuse to bail out the $4 trillion investment grade BBB corporate market which was about to blow up in March, then a long came a deadly virus (0.7% mortality!). They could then act in extremis and bail out Wall Street and the City because that’s all that matters.

    • Ruthless Gangbuster says:

      Well at this point they are bailing out everyone and everything, debt to GDP around 135% already I believe, that’s an additional 30% in 3 months, the US will be bankrupt if they keep on :)

    • sunny129 says:

      Except for one or two,most of the Corp Credit BOND (investor grade not others!) ETFs were UP today! like IGLB and VCIT

      Fed may say that we don’t do ‘elephant run’ across the Bond sector but sure they keep on supporting the high grade bonds. SPHD got hit, so I dropped it permanently!

    • CRV says:

      I’m getting tired of “it’s only 0,7% mortality”, as if it doesn’t matter.
      For the USA only that amounts to 2310000 (2,3 million) people dying. And you don’t care, except for your ‘sivil right’ to be ignorant?
      The Germans needed a few years to kill that amount of people in their gas chambers and they still have to hear about it today. Which is a good thing as we shoudn’t ignore that fact and be conscious about the evil men is capable of. We will be hearing about the ignorance of our time and the results of that in years to come.
      So i plea to you, stop not caring about people getting sick and dying.

    • Cas127 says:


      The timing on the C19 stimulus and the reality of the BBB debt maturity mountain is remarkably coincidental.

      But a nation/political class addicted to living on the razor’s edge/always telling the future to go f*ck itself, is always, and with accelerating frequency, going to “stumble” into disaster after disaster, and find it “necessary” to prop up a diseased past with corrupt expedients that ensure an ever more diseased future.

      These have become cultural traits in Weimar America.

      So, pandemic or plan-demic?

      In the end, it almost doesn’t matter, because the underlying disease is less C19…than it is the long degenerate state of DC.

  14. DR DOOM says:

    The Fed has proven we don’t need to work. Keep the Money printer goin Brrrrrrrrr…… And send me my money. This GDP thingy is going my way. The Govt has let the cat of the bag. Working is not necessary. I knew they were lying all along. They were keeping that magical printing machine for themselves.End of Q3 means I will have to get another check . The rest of the world better get busy,I am in a buying mood.If they hesitate sanction their lazy asses.Nothing can stop our Fed. Best Fed ever.

    • Most interesting sidebar yet. First corporations were too big too fail, they knew they didn’t need profits. Now workers are onto the gambit. They don’t need work. The Fed is propping up an obsolescent society with tons of nonexistent taxpayer money? We need George Carlin to explain all this.

      • KamikazeShaman says:

        Or Frank Zappa…. or Bill Hicks

        I often ask myself what these 3 comedic oracles would make of our current situation. Someone needs to step up and take their place these days!

        And yet another big thank you to Wolf for pointing out the absurdity of how data is reported in the MSM for maximum shock and awe. Whether it’s numbers from the CDC, MSM, BLS… they are all about as trustworthy as numbers from the CCP at this point.

      • BuySome says:

        Maybe just his old telephone skit about letting your dialing finger take the free ride backwards?

      • Realist says:

        Wasn’t there a joke in the Soviet block before it collapsed:

        “We pretend to work, they pretend to pay us”

  15. Yancey Ward says:

    The funny thing is this- when the 3rd quarter numbers are reported at the end of October, the media will be sure to use the quarterly rate, not the annualized one.

    It is all politics- literally all the way down.

  16. lenert says:

    Looks like the area under the blue bars is about the same as the area under the red bars. Another lost decade.

  17. Jim says:

    You are the best!

  18. Jdog says:

    The moral hazard of what the Government is doing is going to eat them alive.
    It is hard to get people to pay rent when you have told them they don’t have to. It is hard to get people to work, when you pay them more to sit home and get stoned.
    The only thing that will get the people back into a reality check is hardship, and the realization they have to save themselves, and that at this point, that will cause civil unrest.
    Government and Fed policy has created a situation in which the law of unintended consequence is going to go into overdrive.
    When you have shrinking GDP, you have wealth destruction on a mass scale… When you encourage that shrinking GDP, you have a complete failure in government policy. We now have both..

  19. sunny129 says:

    “Annualized rates” are misleading and should be banned from headlines’

    True. But doesn’t do wonders when the number positive for the the bulls participating in this ‘market’ mania?

  20. leanfire_Queen says:

    Is there a reliable way to measure how many of the newly unemployed each week are white-collar or have wages above the median?

    • Wolf Richter says:

      Not that I know of. In fact, I know of no “reliable” way of measuring anything having to do with employment. Data chaos. But I don’t even know of an unreliable measure of what you’re looking for on a weekly basis :-]

      • Wisdom Seeker says:

        I bet ADP has a statistically significant sample of the national population and could provide this information, since they process so many of the actual paychecks.

  21. California Bob says:

    Numbers don’t matter. Larry Kudlow said the other day the economy is ‘Going north, not south.’ That’s all we need to know.

  22. MonkeyBusiness says:

    No impact to big tech companies. In fact they seem to be doing better than ever.

    There’s no recession. There’s no people losing income. It’s a true hoax.

    • MonkeyBusiness says:

      Ads have seen no drop either.

      I am short the stock market, but it’s clear that the economy is flying super hot.

      • TimTim says:

        Every time I hear someone saying they are shorting this or that I just get this uncontrollable urge. An urge to soak a hand towel in cold water to put on my forehead, make a cup of earl grey, and go lie down in a dark room.

        • MonkeyBusiness says:

          My short amount is miniscule. Even if I lose 20 to 30% or gain 20% 30%, my life will NOT change.

          My long position in other things also more than offset my losses.

      • jon says:

        as long as there is a FED PUT, there is no point in shorting. But who knows?
        Usually people taking a contrarian stand makes money.

    • MonkeyBusiness says:

      iPhone sales are up in every region, especially in the Americas.

      There’s no eviction crisis, there is NO crisis. People are more flush than BEFORE the crisis.

    • Wolf Richter says:

      Big G, which reported its first revenue decline, is squeezing my income hard – and it’s squeezing other publishers’ income hard – to make its own quarterly earnings look better. But for publishers, there is no way around Big G these days. You always have to deal with it somewhere. And publishers are completely helpless.

      That company needs to be broken up into several pieces. Publishers are folding and filing for bankruptcy left and right because their ad revenues are falling year after year, and now more so than before, while Big G, FB, and increasingly Amazon are getting fat off the ad business, by being middlemen and owning the ad infrastructure and ad exchanges, and they suck the lifeblood out of the publishing business.

      • Lisa_Hooker says:

        New contract to be announced: “Send us all of your revenue and we will send back what we think you need.”

      • Cas127 says:


        There are a number of ad networks beyond the Big Goo…what are the main problems with dealing with them if the Goo is taking a bigger cut of the ad revenue?

        My guess is that CPMs for display ads are pretty low regardless, the essentially infinite supply of internet pages was always going to drive display CPMs down.

        And cost-per-click (which I imagine has grown in importance) would appear to be fairly ad network agnostic, being largely based on lifetime-customer-worth-to-advertiser.

        A post on practical internet publisher economics would be most enlightening.

        • Wolf Richter says:

          Well, it’s a lot more complicated… these ad networks trade ads between each other and re-sell Google ads. I get those too. It’s the wild west out there.

          The issue with the ads that run through exchanges is that there is a shortage of demand from advertisers (such as GM) and an endless supply of publishers on the internet, including search, FB, WSJ, millions of small sites, etc. This has been the case for a long time. So for the publisher (like me), rates per click (CPC, that’s how they pay, if they pay) have fallen.

          But advertisers still pay an arm and a leg, and they pay more than before. The different layers of middlemen – they’re called “ad tech,” and there are a lot of them – are cutting out an ever-larger slice.

          During this crisis, it got a lot worse. A lot of advertising has dried up, so there is even less demand, and rates for publishers have plunged.

          You can see that most of my ad slots are still filled — but what they pay has plunged. Also, G has become militaristic about not paying for what it deems ineligible clicks, and it takes out huge chunks every month from what it is supposed to pay.

          G isn’t just an ad exchange. It’s all over the entire advertising infrastructure, and it competes directly with publishers through its search ads.

          That said, G is still the least dirty shirt, compared to the other ad exchanges. I’ve tried a few. Some of them have never paid me! This is life on the internet.

          I also use two ad agencies. And it’s a different deal with them (they’re paying CPM, and they’re paying better). But it’s also a constant battle, and they too run ads via ad exchanges.

        • Lee says:


          Welcome to the world of declining income.

          As a former resident of Japan you now get to experience what a lot people there had already had the ‘pleasure’ of.

          University Professors, and I don’t mean the throw away gaijin English lecturers on a short contracts that have seen the pay fall by 50% or more and the number of hours increase by 100%, but real professionals that have seen their income fall or not change in 30 years.

          How about Japanese to English translators? They have been hit even harder. What are they down to now? One cent a word? It used to be US$100 a page for Company Articles of Incorporation or medical journal articles.

          At the same time all that has been going on there have been huge increases in pension costs and medical insurance costs.

    • RightNYer says:

      Are you trolling, or just this ignorant?

  23. TimTim says:

    But what if….

    The coronavirus economic impact is currently something like the passage of a 45-70 round through a 2KG block of ballistic gel, let go at the gel from 20 yards.

    The hole is easily visible soon afterwards. The way the block jumps is, again, easily visible soon afterwards. So, what just happened is clear to everyone!

    That could be analagous to short-term, ill-judged, economic reporting.

    The energy transfer through the ballistic gel, internal effect, is only visible on slow-motion replay afterwards.

    Read whatever you care about into that block of gel. It could represent equities, sociopolitical consequences, gold, whatever.

    My point is, maybe our analysis timeframes are too short. We live day to day, week by week, so our need to know demands information on those timescales.

    Perhaps, we could do with a little bit of cognitive housekeeping.

    Such that adjusts our scope, our expectation of sensible information, to February/March 2021 or possibly this time next year. 20 yards to 200 yards, perhaps.

    But if we didn’t have Wolf to call the BS out there in the meantime, well, I think we might all go a bit nuts.

    • MiTurn says:

      “45-70 round”

      That’s old school…old, old, old school. But it still does the job.

  24. Dave says:

    The time to change from annualized numbers to quarterly is when this so called pandemic is over, not during it.

    That won’t happen though because it’s all about Headlines to get more eyeballs to make more money from advertisements.

    Regardless, the numbers still stink!

  25. JK says:

    “Don’t fight the Fed”-Marty Zweig.

    “Markets climb a wall of worry.” I’m long.

  26. sierra7 says:

    The executioner will always maintain that the victim will feel no pain as long as the blade is very, very sharp!
    No matter how you read the numbers they are all terrible.
    The best example is the charts posted by Mr. Richter.
    Seeing is believing.

  27. Jim says:

    -9.5% Q2 GDP, then back out the deficit spending >
    I don’t know the exact numbers, but it has to be around -15 to 20%.

    Throw in the inflation I am seeing in the food markets (and housing in the Hampton’s and Lake Tahoe), and this long hot summer is setting up for stagflation, and a populist explosion.

    If printing money lifted all boats, the Romans would of done it two thousand years ago.

    • Cas127 says:

      The Romans did do it, and it played a significant role in their decline.

      “Fun” fact…why are US quarters ridged along the rim?

      At this point, the ridging is an anachronism but historically it existed to dissuade shaving of precious metal coins (quarters used to be made of marketable silver). Ridging would quickly expose shaving…revealing debasement of the coinage.

      Such shaving (ie devaluation) of the coinage by the G became increasingly common as the Roman Empire declined.

      It was a “hidden” tax on the Roman population by an increasingly incompetent, corrupt, and degenerate Roman leadership.


      See ZIRP.

  28. Phoenix_Ikki says:

    I think this whole annualized % way of looking at things illustrate how things can also have unintended consequences. In good times, it makes the puny numbers look better than it is, give the people in charge something to brag about to pump up the market, however, in extraordinary bad time like today it can be a double edge sword. Luckily market is completely running on endless optimism backed by the FED so even these boosted bad numbers aren’t doing a darn thing for a reality adjustment.

  29. Augusto says:

    However you define it was terrible. It would have been a lot worse had it not been for the free, printed money handed out. Already holders of USD’s around the world are starting to get nervous as they see what they have worked hard for and “saved”, given away like confetti. This will not end well.

  30. Rain says:

    I think this is the first quarter in history with a “30+%” lose in GDP as well “30+%” gain in the index market… can’t wait to see what’s coming next.

  31. Bet says:

    Googl reports it’s first revenue decline It’s history

  32. Eddie says:

    Mr. Richter,

    Hope you had a good day.

    Check out yoursef that in “Disclosure Statement for Joint Prepackaged Chapter 11 Plan of Reorganization” they discussed every detail in dept but regarding Assets just provided overview without any figures. Providing link below

    Again and again they are trying to convince that its because of COvid 19. Further hidden buyers who are after taking over high asset value company along with management already possess Second Lien Notes Claim (Class 5) & Convertible Notes Claims (Class 6). Remaining Subordinated Notes
    Claims (Class 7) & Existing Equity Interests (Class 11) who also have voting rights have to agree with plan otherwise in simple words GTH. Because for voting on the plan law says; Once you finalize a plan, you’ll file it with the court and send it out to creditors along with a voting ballot. When the creditors return ballots, you’ll count the votes and group them together by class.

    Under Chapter 11 rules, if at least one-half of the number of creditors and two-thirds of the dollar amount of claims in an impaired class vote yes, then the class has accepted the plan—even if all of the other class creditors vote no.

    They already have votes of class 5 & class 6.

    Whole enviornment is upside down due to pandemic that no body wants to dig depper. DNR is a pure case of Asset grab and of management acting in bad faith (Malafide).

    May God bless you.

  33. JRhill-wolf says:

    Watching the ABC news tonight with the bride. There was the bar graph of the -33%. But, go figure, it didn’t give context and displayed so fast you couldn’t get a grasp of the details. There and gone.

    The sky is falling! Run for the, eh, other cities! (please not the hills).

  34. Lee says:

    “Victoria is tipped to report seven deaths and 627 new cases on Friday after 13 deaths and 723 new cases on Thursday”

    What’s the annualized rate of increase there? In June we were down to single digits.

    Gee we’ll all be dead in a month!!

    Stage 4 restrictions for Melbourne are probably just around the corner with everything but grocery stores, medical care, and gasoline stations closed.

    No doubt the Australian share market will then zoom up at a 1000% annualized rate of increase as soon as the restrictions are announced!!

  35. sunny129 says:

    More pain ahead but Mkts keep zooming!?

    Over the last 18 weeks, more than 52 million Americans have filed new claims for unemployment benefits, and a very large percentage of them are dealing with a permanent job loss. In fact, one brand new survey discovered that 47 percent of all unemployed workers now believe that their “job loss is likely to be permanent”. The following comes from a USA Today article entitled “Almost half of all jobs lost during pandemic may be gone permanently”…

    In April, 78% of those in households experiencing job loss felt that that situation would be temporarily. But now, 47% think that job loss is likely to be permanent, according to The Associated Press-NORC Center for Public Affairs Research.

  36. OutWest says:

    It’s hard to reconcile the disconnect. Everywhere I go most people are driving rather new cars, and those cars are washed and clean yet the economy is relatively speaking, shrinking at an alarming rate. It is time to save cash and cut expenses. Looks like home schooling is the new thing.

  37. Ralf says:

    Wolf, you make a good point from th stand point of communicating economic data to the general public. There is a reason why economists annualize data and there is certainly no intention to mislead. It’s those that communicate economic data poorly that are at fault.

    The Dallas Fed has a nice write up on the rationale of annualization.

    • Wolf Richter says:


      Nah, that Dallas Fed article suggests that there might be a very technical reason why in employment data, annualized rates might make data more comparable between different periods. OK, if you’re researcher and that’s your thing, fine, but you don’t need annualized rates even as a researcher, you can just look at the actual rates and get the same thing. That’s exactly what the example in the Dallas Fed’s article demonstrates: you don’t need annualized rates.

      But what I said was ban annual rates from the headlines. Stick them deep down in the report so that people who want to look at them, can. This is what I said:

      “I implore the government entities that decide this to start the process of switching it around: Report at the top of the data release the “not annualized” figures, and deep down, hidden in the tables and details, have a column for annualized figures, for those that want them.

      “And keep the rest of the people – who have better things to do than digging through 20 pages of GDP data on a Thursday morning – properly informed.”

  38. Kasadour says:

    What difference does it make? What’s that saying- six is all of ½ of a dozen? The quarterly figure of -9.5% is actually worse than the annualized figure of -32.9%. Either way, each metric has a valid roll in evaluating, defining and forecasting U.S. productive economic output. I don’t see the end product meaningfully skewed regardless of the methodology used to calculate real GDP or the FEDs GDPNow methodology.

  39. Just Some Random Guy says:

    It’s all political of course. Whenever 2 options are presented to the media, the one that hurts Trump more is chosen. Which is why nobody really believes anything the MSM says anymore.

  40. Nostradumbus says:

    I do not have an issue with the ‘annualized’ perception as long as it is consistent over time.

    The US is big big big really big (rolling eyes) and in my lifetime they have always pumped BIG NUMBERS over reality.

    Twenty trillion dollars is BIG but essentially over time on a quarterly basis we should be happy with $150B+ these days.

  41. Unamused says:

    If there’s one thing you can count on here it’s deobfuscation of economic statistics.

    It’s more than important. It’s crucial to understanding the data so as to properly support public policy. And nobody does it better.

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