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‘GDP Shrank 4.8%’ – No. Forecast 30% Drop? Fantasy

The economists’ statistical engine is running amok again, just like in 2008-2009. It’s making mountains from molehills (make that sinkholes from potholes), scaring the heck out of investors, reporters and just about everyone else. Here’s what’s wrong. Whenever the economy coughs, economist’s yell, “Pneumonia!” They are not being alarmists. The problem is that their analytical machinery only works when big numbers take mini-steps along a stable trend. For example, in 2019 the GDP rose 2.3% for the year, broken down by quarterly moves of 0.76%, 0.50%, 0.52% and 0.52%. This has been the picture for pretty much all. Read more

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