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| People wearing protective masks sit on a bench in front of a restaurant at the Ferry Building in San Francisco, July 28. PHOTO: DAVID PAUL MORRIS/BLOOMBERG NEWS |
Incredibly, some in the media want to repeat the second quarter’s 32.9% plunge in GDP.
Democrats and their media allies have trapped themselves in a contradiction. They are deploring Thursday’s grim second-quarter GDP report even as they demand a repeat of the lockdown that caused the economic catastrophe. What do they expect when government orders Americans to sit in their homes for weeks?
That’s the main message from the 32.9% decline in GDP, the worst ever recorded. The damage extended across the private economy — from business investment to manufacturing and housing. But the greatest harm was from the collapse of consumer spending as the shutdown crushed the service economy.
Consumer spending fell 34.6% and accounted for some 25 percentage points of the GDP decline. The fall in transportation, recreation, food services and hotels was brutal. But the biggest surprise was the plunge in health-care spending during a health-care crisis. Health care represents about 12% of the U.S. economy and its collapse subtracted 9.5 percentage points from GDP.
How does that happen in a pandemic? The answer, as our friend Don Luskin points out, is that politicians panicked in March and waited for a surge of Covid-19 patients that the pandemic modelers told them would arrive. Blessedly, the modelers were wrong, and far fewer hospital and intensive-care beds were needed. But the economic harm from stopping all elective surgeries and barring visits to doctors was severe and unnecessary.
It was also a terrible public-health blunder. That harm will play out for years as Americans discover cancer, heart-disease and other diagnoses that were missed or delayed.
Source: The Editorial Board | The Wall Street Journal
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