Tuesday, October 13, 2020

What the IMF is Right and Wrong About on their Economic Projections for the U.S.?

 I'm reading through the IMF World Economic Output. The U.S. is projected in 2020 to have a -4.9% GDP  contraction from the 2.3% in 2019 and then a 4.5% GDP expansion in 2021. You can read more about it HERE.   From the report you have the impression that the pandemic was completely destructive but that there should be an increase of over 2.2% improvement over 2019. 

First, let me say that I suspected that there would be an increase in 2021. Perhaps overall there is a decline in 2020 but that we start to adapt and we should see serious increases in Q3 and Q4. I think there will be an under projection by the IMF for the 2021. 

One of the reasons why this happens and how it doesn't completely apply to the U.S. is that we were already starting a transition to a more virtual economic existence and its impact on Digital GDP before Covid. The pandemic forced us to adapt faster. 2023 and 2024 will likely be marked improvements as investment to the U.S. return and technology takes precedence.

There will naturally be a dip in 2020 as we deal with the pandemic but as investments increase we should see a very strong early 2021 in the first 2 quarters. So along with my theoretical ramblings I expected a stronger recovery at the end of 2020 and beginning of 2021 back in April/May of this year and the need for Digital GDP in late 2019 just prior to the Pandemic.

I'm kind of curious if I will be close. Not exact but if the trends work that way form an intellectual exercise. 😜

Lets see what happens! You can read a few articles on adaptation below....

GDP Contracts 1st Q of 2020-Is It a Short Lived Shock and Digital GDP Recovery?


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