The U.S. economy contracted 4.8% in the first quarter of 2020. With the coronavirus crisis continuing into the summer, economists are expecting an even steeper contraction in the second quarter. WSJ’s Carter McCall explains how GDP is calculated and how the coronavirus is impacting the equation. Photo Illustration: Jacob Reynolds/WSJ
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Gross Domestic Product, or GDP, is a key indicator of a country’s economic health. It measures the total value of all goods and services produced within a country’s borders over a specific period of time. GDP is widely used to gauge the overall health of an economy, and it can also provide important insights into whether a country is in a recession.
When GDP declines for two consecutive quarters, it is considered a sign that the economy is in a recession. This is because a decrease in GDP indicates a decrease in economic activity, which can lead to job losses, lower consumer spending, and overall economic hardship.
The Wall Street Journal recently published an article highlighting the importance of GDP in identifying recessions. The article points out that while there are other economic indicators that can signal a recession, GDP is a crucial measure that provides a comprehensive view of the economy.
GDP can be broken down into different components, such as consumer spending, business investment, government spending, and net exports. By analyzing these components, economists can gain a clearer understanding of the factors driving economic growth or contraction.
For example, if consumer spending is weak and business investment is slowing down, it can indicate that the economy is on the brink of a recession. On the other hand, strong consumer spending and robust business investment can signal a healthy economy.
In addition to tracking GDP growth, economists also look at the overall size of the economy. If GDP is flat or declining, it can indicate that the economy is struggling to grow, which may lead to a recession.
The article also highlights the role of government policies and central bank interventions in influencing GDP growth. For example, fiscal stimulus measures, such as tax cuts and increased government spending, can boost GDP and help prevent a recession. Likewise, monetary policies, such as interest rate cuts, can stimulate economic activity and support GDP growth.
In conclusion, GDP is a crucial tool for assessing whether a country is in a recession. By analyzing GDP data and its components, economists can gain valuable insights into the state of the economy and make informed decisions about policy interventions. The Wall Street Journal’s article underscores the importance of paying attention to GDP to understand the overall economic health of a nation.
81 million votes
THE PLANS THEY HAVE MADE.
This has been thoroughly planned since 2016. They’ve added more and more corruption and it Will Cease.
WE THE PEOPLE MUST go into the offices of our State, Local and Federal Government asking questions regarding their plans for US. WE THE PEOPLE have allowed ourselves to be outcast long ENOUGH!!! Term limits please.
GDP is something we will be needing to rethink a lot over time towards its overall use, look at the bottom window fallacy.
It's way better to have a stimulus than unemployment. We need to take care of today before we even think about tomorrow.
If you really want to know how the economy is doing ask your local business owners. The market right now is extremely hyper inflated and the bubble will eventually burst
GDP does not measure well, only about corporations and the country, not the people in the society…find a different measure.
yangngang
The entire concept that a recession is signaled by 2 consecutive quarters of GDP contraction is silly. That notion came from a newspaper article decades ago in which one economist was asked how we would know if we are in a recession. He gave a ton of different indicators, but this '2 quarters' indicator was the easiest for the media and people to remember.
So, recession is negative economic growth in two consecutive quarter. Is it quarter to quarter or year on year comparison?
Wrong again! American is rebounding from the CCP virus like never before! These so called “experts” should def learn more useful skills!
Hence we see 70% startup shaking
Trump says we are good man
Short video on WTI vs Brent oil: https://youtu.be/SouGCnuuros
Please shift your currency to crypto currency and you can print e-currency out of thin air ……trillions of dollars
Transfer payments dont count in gdp
The GDP is a false number. Another country with the same population, doing exactly the jobs but 1 is paid $2/hour and the other being paid $10./hour, how does this make sense?
Looking at the gigantic number of people infected and dead rate of COVID 19 in the western countries, and that far serious than any country in the east. We shall correct the incorrect, the racist disinformation from the America, to the fact that this is “real sick man of the west” .
One of the two industry items WSJ cited was Oil, which was directly effected by the response the the virus. So why aren’t you proposing some solutions to the problem? I would think that the WSJ would be interested in seeing the economy grow.
FED hears the word "recession" and the printer goes brrrrr.
This video fails in providing actual defined recessionary and recovery phase information. It approaches the topic then the graph, video, and data points in the end are left out.
Recover to what? Its was already going down even before the pandemic.
They failed even to comment that GDP 2019 was 2.2%
Last year was dismal growth despite the trillions of injection
GDP tells you about a country's income. Income is low, GDP obviously went down. This video is misleading. GDP can't predict anything. It never did.
That means
-0.25trillion in the 1st Q
-2trillion in the 2nd Q
Oh, the G variable , so give more paychecks to keep GPD higher , don't spend in anything else for stimulus , just deposit straight to Americans' bank account. Lol