Washington, DC (Thursday, June 24, 2021): On June 24, 2021, the federal Bureau of Economic Analysis (BEA) released data for the first quarter 2021 Gross Output (GO) – the most comprehensive measure of total spending in the economy, including the supply chain. The data reveled that Gross Output advanced significantly in the first quarter 2021 and dramatically outpaced GDP growth for the same period.

Many economists feared a long economic downturn and marginal growth in the aftermath of the sharp economic decline in the second quarter 2020. However, it appears that the second-quarter downturn was just a short term reaction to the 2020 economic slowdown caused primarily by government restrictions and business shutdowns in responses to the COVID-19 epidemic.

Another quarter of economic data indicates that the U.S. economy continues to fire on all cylinders and maintains a steady growth trend. After fourth-quarter expansions of 6.1% and 10.6% in nominal terms, GDP and GO expanded even faster in the first quarter 2021 at 10.5 and 16.1%, respectively.

In real terms, GDP grew 6.4% and GO expanded 8.9% in the first quarter 2021. The nominal adjusted gross output, which includes an additional $9 trillion in gross retail and gross wholesale activity omitted from the official government’s GO figures, advanced nearly 20%, which is equivalent to an 11.5% expansion in real terms.

While the rising GDP is still approximately 1% short of its all-time high from Q4 2019, both GO and Adjusted GO (GO*) reached new all-time highs in Q1 2021. Moreover, GO* broke above $48 trillion in real terms and above $42 trillion in real terms for the first time ever.

The positive economic growth figures released today further solidify a steady economic recovery. As more states lift business restrictions and reopen their economies, economic stability appears more likely, which should translate to a continuation of the current economic expansion. At the end of May, the U.S. crossed the 50% mark in terms of population share that has received at least on dose of COVID vaccination. This is just another factor that will provide people with confidence to resume normal economic activities and fuel economic growth.

While first quarter results paint a mostly positive picture, we are concerned that inflation will threaten the recovery. Based on the comparison of nominal and real GDP and GO figures, the annualized inflation in the first quarter 2021 exceeded 8%, which is significantly higher than reported annualized CPI inflation figure of 1.7%.

Another indication that the economic pullback last year was only a temporary event is the relationship between the GO and GDP decline during that period. Earlier stages of production are generally more sensitive and more volatile in their response to economic disruptions. Therefore, during past recessions, GO commonly declined significantly more than GDP, which captures only final outputs in the economy.

For instance, GO declined more than 26% during the last quarter 2008. In the same period, GDP pulled back less than 8%. The 2020 economic slowdown broke from this pattern and saw GO decline at similar rates as the GDP. Over the last two quarters, GO has been recovering and expanding faster than GDP.

This anomaly from the established historical pattern, provides another indication that the underlying business fundamentals are significantly stronger than originally anticipated, that government shutdowns in response to the COVID-19 epidemic might have been unnecessary. Those responses might have even amplified the initial economic contraction in the second-quarter 2020.

More importantly, as it did during the fourth quarter, business spending continued to outpace consumer spending in the first quarter 2021.

 

Business – Not Consumers – Drives the Economy

Contrary to views of many academic economists and wide-spread media reports, consumer spending does not drive the economy, and does not represent two-thirds of the economy. Using GO as a better and a more accurate measure of total spending in the economy, the business sector (B2B spending) is almost twice the size of consumer spending. Consumer spending is the effect, not the cause, of prosperity (Say’s law).

Therefore, our business-to-business (B2B) index is very useful for gauging the economy’s underlying health and the readiness to rebound after economic downturns. The B2B Index measures all the business spending in the supply chain and new private capital investment. In the first quarter 2021, nominal B2B activity expanded more than 23% to $28.3 trillion. At the same time, consumer spending grew 14.7% on an annualized basis to $14.1 trillion. In real terms, B2B activity expanded at an annualized rate of 18.7% to $24.5 trillion and consumer grew 7.2% to 13.3 trillion.

 

“B2B spending is in fact a pretty good indicator of where the economy is headed, since it measures spending in the entire supply chain,” stated Skousen. “After recovering from the decline in the first half of 2020, business activity continued its expansion and followed of 39% and 12% real-term growth in last two quarters of 2020, with an 18.7% advancement in the first quarter 2021.”

 

GO Increase Outpaces GDP Growth in Third Quarter to Indicate Potentially Accelerated Economic Recovery

Despite significant declines in the first two quarters of 2020, Gross Output indicates robust long-term growth. Prior to what appears to be merely a short-term pullback, GO delivered steady quarterly growth over the previous 42 consecutive periods. Gross Output growth slowed in late 2019, which could have been an early sign of economic slowdown even before the pandemic and government shutdowns in early 2020.

However, GO’s quick recovery in the past three periods indicate that, barring any new “black swan” events, the robust economic growth is likely to continue for the remainder of 2021. Gross Output is a leading indicator of what GDP will do in the next quarter and beyond. As David Ranson, chief economist for the private forecasting firm HCWE & Co., states, “Movements in gross output serve as a leading indicator of movements in GDP.”

The federal government will release the advance estimate for second-quarter 2021 GDP on July 29, 2021 and the full release of Gross Output, as well as the third estimate of GDP on September 30, 2021.

Important Note:  We are hopeful that in the near future, the BEA will release GO at the same time as the first estimate of GDP for the quarter, not the third estimate.

 

Report on Various Sectors of the Economy

After the general decline in the first two periods 2020 and a robust recovery in the second half of that year, almost all economic sectors continue to expand in the first quarter 2021.

After reversing a down trend from the previous three-quarters and expanding at nearly 10% in Q4 2020, the mining sector cooled off and grew at an annualized rate of 0.5% in real terms for the first quarter 2021. The main driver for this tepid growth is a 13% decline in the Oil and gas extraction sub-segment, which expanded at more than 5% in the previous period. While expanding more than 20% in the first quarter, the other mining operations in this segment could not compensate for the decline in the oil and gas extraction, which accounts for more than 80% of the overall Mining segment.

Despite accounting for just 1.7% of the overall economy, mining represents the earliest stages of production. Therefore, we watch the expansion and contraction of the Mining segment as early indicators of what other sectors further down the supply chain might do in subsequent periods.

The Agriculture sector was 5.6% smaller than in the previous period and was one of just three the three segments that experienced contractions in Q1 2021. Manufacturing – which is the second largest segment of the economy with an 18% share – reversed its one one-quarter growth of 5.7% from the previous period and declined 3.7% in Q1. While accounting for approximately half of the segment, Nondurable goods contracted nearly 7% and Durable goods diminished 1%.

The third declining segment this period was Educational services, health care, and social assistance. While 8.6% higher for the period, the Education sub-segment accounts only for 12.5% of the overall segment, so the 2.9% decline in healthcare and social assistance – 87.5% share of the category – drove the overall segment’s 1.5% contraction.

On the positive side, the remaining 14 out of 17 industries expanded at least 5%. The largest segment of the economy, Finance, insurance, real estate, rental, and leasing, which accounts for one-fifth of GO, built on its 5% expansion in the previous period and grew 10.2% in Q1 2021.

Real estate rental and leasing sub-segment contributed to that growth by expanding nearly 4%. However, the Finance and insurance sub-segment grew more than 18%. One point of caution amid positive results is that the sub-segment with the highest growth rate – 20.65% – in this industry segment was Federal Reserve banks, credit intermediation, and related activities. However, the largest sub-segment – Insurance carriers and related activities – grew at 20%, which should lessen some of the concerns from Federal Reserve activities.

The Construction sector could not maintain its growth of nearly 12% from the previous period, bust still expanded 5.4% in Q1 2021. The Transportation and warehousing sector maintained its high growth rate and followed its 17.4% rate from Q4 2020 with a 17.7% expansion in the first period 2021. After nearly doubling in the prior period, Transit and ground passenger transportation sub-segment pulled back 20%. However, this pullback was offset by other modes of transportation that continued to expand at rates similar to the previous period. Water transportation volume improved 19.4%, trucking expanded 4.9% and Air transportation grew 63.2%.

Unfortunately, after no expansion in Q4 2020, government spending kicked into high gear in the first quarter 2021. While State and local spending advanced at a modest 1.5%, Federal spending surged more than 15%. While the federal government’s growth rate is significantly higher, State and local government spending accounts for two thirds of total government spending. Therefore, the State and local government’s modest spending increase kept the combined government spending increase below 6%. Within Federal spending, Defense spending declined 4.4%. However, Nondefense spending was 51.4% higher than in the previous period.

 

Gross output (GO) and GDP are complementary statistics in national income accounting. GO is an attempt to measure the “make” economy; i.e., total economic activity at all stages of production, similar to the “top line” (revenues/sales) of a financial accounting statement. In April 2014, the BEA began to measure GO on a quarterly basis along with GDP.

Gross domestic product (GDP) is an attempt to measure the “use” economy, i.e., the value of finished goods and services ready to be used by consumers, business and government. GDP is not quite the same as the “bottom line” (profit, or net income) of an accounting statement, but rather the “value added” or the value of final use.

GO tends to be more sensitive to the business cycle, and more volatile, than GDP. .

About GO and B2B Index

Skousen champions Gross Output as a more comprehensive measure of economic activity. “GDP leaves out the supply chain and business to business transactions in the production of intermediate inputs,” he notes. “That’s a big part of the economy, bigger than GDP itself. GO includes B2B activity that is vital to the production process. No one should ignore what is going on in the supply chain of the economy.”

Skousen first introduced Gross Output as a macroeconomic tool in his work The Structure of Production (New York University Press, 1990). A new third edition was published in late 2015, and is now available on Amazon.

Click here: Structure of Production on Amazon

The BEA’s decision in 2014 to publish GO on a quarterly basis in its “GDP by Industry” data is a major achievement in national income accounting. GO is the first output statistic to be published on a quarterly basis since GDP was invented in the 1940s.

The BEA now defines GDP in terms of GO. GDP is defined as “the value of the goods and services produced by the nation’s economy [GO] less the value of the goods and services used up in production (Intermediate Inputs or II].” See definitions at https://www.bea.gov/newsreleases/industry/gdpindustry/gdpindnewsrelease.htm

With GO and GDP being produced on a timely basis, the federal government now offers a complete system of accounts. As Dale Jorgenson, Steve Landefeld, and William Nordhaus conclude in their book, A New Architecture for the U. S. National Accounts, “Gross output [GO] is the natural measure of the production sector, while net output [GDP] is appropriate as a measure of welfare. Both are required in a complete system of accounts.”

Skousen adds, “Gross Output and GDP are complementary aspects of the economy, but GO does a better job of measuring total economic activity and the business cycle, and demonstrates that business spending is more significant than consumer spending,” he says. “By using GO data, we see that consumer spending is actually only about a third of economic activity, not two-thirds that is often reported by the media. As the chart above demonstrates, business spending is in fact almost twice the size of consumer spending in the US economy.”

 

For More Information

Steve Forbes: What’s Ahead podcast. In this podcast, Steve Forbes discusses Gross Output with Mark Skousen on September 9, 2019:  https://www.forbes.com/sites/steveforbes/2019/09/09/were-using-the-wrong-measure-gdp-to-gauge-the-economys-real-health-mark-skousen/#35ff3d9a52fa

GO-Day podcast discussion panel hosted Mark Skousen that included Steve Forbes, Sean Flynn, Steve Hanke, and David Ranson, September 30, 2020: https://chapman.zoom.us/rec/share/KJ17YjuR_6zthmgOA5fNprv2e65F-jICOsf430bJvnu8qWzdPYPfTohPC48qRLe9.Q8rmnlXynnTN74Tv?startTime=1601488807000

The GO data released by the BEA can be found at www.bea.gov under “Quarterly GDP by Industry.” Click on interactive tables “GDP by Industry” and go to “Gross Output by Industry.” Or go to this link directly: http://www.bea.gov/iTable/iTable.cfm?ReqID=51&step=1#reqid=51&step=3&isuri=1&5102=15

For more information on Gross Output (GO), the Skousen B2B Index, and their relationship to GDP, see the following:

Mark Skousen, “If GDP Lags, Watch the Economy Grow,” Wall Street Journal, April 24, 2018:  https://www.grossoutput.com/2018/04/26/away-go-economy-growing-faster-expected/

Mark Skousen, “At Last, a Better Way to Economic Measure” lead editorial, Wall Street Journal, April 23, 2014: http://on.wsj.com/PsdoLM

Steve Forbes, Forbes Magazine (April 14, 2014): “New, Revolutionary Way To Measure The Economy Is Coming — Believe Me, This Is A Big Deal”: http://www.forbes.com/sites/steveforbes/2014/03/26/this-may-save-the-economoy-from-keynesians-and-spend-happy-pols/

Mark Skousen, Forbes Magazine (December 16, 2013): “Beyond GDP: Get Ready For A New Way To Measure The Economy”: http://www.forbes.com/sites/realspin/2013/11/29/beyond-gdp-get-ready-for-a-new-way-to-measure-the-economy/

Steve Hanke, Globe Asia (July 2014): “GO: J. M. Keynes Versus J.-B. Say,” http://www.cato.org/publications/commentary/go-jm-keynes-versus-j-b-say

David Ranson, “Output growth data that the economy generates months earlier than GDP,” Economy Watch, July 24, 2017. HCWE & Co. http://www.hcwe.com/guest/EW-0717.pdf

Mark Skousen, “Linking Austrian Economics to Keynesian Economics,” Journal of Private Enterprise, Winter, 2015: http://journal.apee.org/index.php?title=Parte7_Journal_of_Private_Enterprise_vol_30_no_4.pdf

To interview Dr. Mark Skousen on this press release, contact him at [email protected], or Ned Piplovic, Media Relations at [email protected]

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[1] The BEA currently uses a limited measure of total sales of goods and services in the production process. Once products are fabricated and packaged at the manufacturing stage, the BEA’s GO only adds “net” sales at the wholesale and retail level. Its official GO for the 2021 1st quarter is $39.5 trillion. By including gross sales at the wholesale and retail level, the adjusted GO expands to $48.6 trillion in Q1 2021. Thus, the BEA omits more than $9 trillion in business-to-business (B2B) transactions in its GO statistics. We include them as a legitimate economic activity that should be accounted for in GO, which we call Adjusted GO. See the new introduction to Mark Skousen, The Structure of Production, 3rd ed. (New York University Press, 2015), pp. xv-xvi.

Columnist and author Walter Lippmann (1889-1974) was considered the most influential journalist of the 20th century.

Who is the Walter Lippmann of our day?  Richard Rahn, who writes for the Washington Times, comes the closest.  He focuses on ideas and problems, and avoids the politically divisive “left-right” labels.  I highly recommend his columns:  https://www.washingtontimes.com/staff/richard-w-rahn/

Lately I’ve been reading “The Good Society,” by Walter Lippmann (his best book), and see that he was highly influenced by Mises and Hayek, so that he rejected socialist central planning….although he supported Keynesian monetary and fiscal policy.

Here is a short summary of his approach:

“Lippmann’s style was distinctive and very effective with his audience.  He did not patronize and was resolutely nonpartisan.  He supported candidates for public office whose positions pleased him regardless of party affiliation.  He could and often did change his mind about people and politics.  He read widely and made every effort not to be identified with any group or ideology.  For example, although he drew from both traditions he was careful not to present himself either as a Keynesian or an Austrian.  He was often impatient and he tended to become disillusioned quickly with politicians after they had been elected, especially presidents of the United States.

“Often he experienced and reflected upon a problem well in advance of bringing it to his readers.  He preferred to make use of theory only after he had gathered a lot of empirical evidence….His style was to lay out his arguments simply and without jargon.

“It is impossible to gauge precisely Lippmann’s influence upon his readers, but it must have been substantial.  Indeed, it seems he could help to make or break a political career, and he could speed or retard the passage of a bill through Congress.”  — Craufurd D. Goodwin, “Walter Lippmann: Public Economist” (Harvard University Press, 2014), pp. 2-3.

In 2001-02, I served as president of the Foundation for Economic Education (FEE), the oldest free-market educational institution in the United States.

When I arrive I felt at home immediately when I saw the photographs of three members of my faith who had served as members of the FEE board – Ezra Taft Benson (former Secretary of Agriculture), J. Reuben Clark, Jr. (former ambassador to Mexico), and Ernest L. Wilkinson (president of BYU).

Here is the story when Ezra Taft Benson came to FEE headquarters in May, 1977, and addressed supporters and then the board members.

In May 1977 Ezra Taft Benson addressed the board of the prestigious Foundation for Economic Education (FEE), of which he had previously served on the board of trustees (as had J. Reuben Clark, Jr. and Ernest L. Wikinson).  He warned that while America had become the world’s richest nation because of free enterprise, today’s citizen was learning to depend on the state, thus jeopardizing personal freedom.

The following day he was invited by the president of the foundation, Leonard E. Read, to attend a trustees meeting.  “The first question [they asked me] was on the Church, and they never left that theme,” President Benson wrote that night, “so I spent an hour answering questions, telling them about the Church, bearing my testimony to them and telling of Church policies and my experiences in the Cabinet.”  One board member lingered afterwards and told him, “I want what you have.  When we go home, I’m going to look up your church.”

Shortly thereafter President Kimball received a letter from Leonard Read, who wrote, “Last evening we had some 160 freedom friends to hear President Benson’s lecture, ‘The Productive Base of Society.’ Imagine the audiences and lectures I have arranged during…more than 31 years as President of FEE….Well, last evening was the best of all.  Never have a witnessed such interest, approval, esteem.  This forenoon, however, even topped last evening—this being an hour’s discussion with 26 of our Trustees and many guests.  All were profoundly moved by Ezra’s economic, intellectual, moral and spiritual insights.  Among my acquaintances in this and 22 foreign nations, I have never come upon his equal.”

President Benson sent an engraved copy of the book, Meet the Mormons, and a copy of the Joseph Smith story to each trustee of the foundation.

–“Ezra Taft Benson, A Biography,” by Sheri L. Dew (Deseret Book, 1987), p. 451.

 

 

“It was the most heart-rending and most inspiring scene I’ve witnessed.”  –News reporter

From the time he arrived, Ezra Taft Benson repeatedly requested that he be taken to visit one of the two Protestant churches in Moscow.  Finally, as his party was taken to the airport for their departure, he again asked to stop at a church.  Reluctantly, his driver swung into a narrow alley behind an old stucco building – the Central Baptist Church.  It was raining, but the chill left as the Secretary’s party entered the church which was filled to overflowing with mostly middle-aged and elderly people.  Ezra understood that Soviet citizens attended these services at some risk; anyone who looked to a career of any kind avoided the slightest suspicion of belief in Christianity.

The American group caused an immediate stir in the old church.  A newsman present described the scene: “Every face in the old sanctuary gaped incredulously as our obviously American group was led down the aisle.  They grabbed for our hands as we proceeded to our pews which were gladly vacated…Their wrinkled old faces looked at us pleadingly.  They reached out to touch us almost as one would reach out for the last final caress of one’s most-beloved just before the casket is lowered.  They were in misery and yet a light shone through the misery.  They gripped our hands like frightened children.”

Surprisingly, the minister invited Secretary Benson to speak.  Knowing there was some danger, Ezra turned to Flora and asked if she thought he should do it.  Without pause she answered, “You bet, T!”  And he made his way to the pulpit.

Never had he stood before an audience like this.  As he scanned the crowd of anxious faces, it took some moments for him to control his emotions.  These were good people, he felt immediately, subjected to a society that deprived them of unrestricted worship.  The emotional impact was almost more than he could bear.  Then he began to speak about hope and truth and love.  As he talked about the Savior and the hope of life after death, tears flowed freely throughout the church.

“Our Heavenly Father is not far away,” the Secretary promised.  “He is our Father.  Jesus Christ, the Redeemer of the World, watches over this earth…Be unafraid, keep His commandments, love one another, pray for peace, and all will be well.”

Women took out their handkerchiefs and nodded vigorously as they moaned “Ja, ja, ja!”  He looked down at one elderly woman, her head covered by a scarf and with a shawl about her shoulders, and spoke as though directly to her: “This life is only a part of eternity.  We lived before we cam here…We will live again after we leave this life…I believe very firmly in prayer.  I know it is possible to reach out and tap the Unseen Power which gives us strength and such an anchor in time of need.”  He concluded, “I leave you my witness as a church servant for many years that the truth will endure.  Time is on the side of truth.  God bless you and keep you all the days of your life.”

By this time teams were streaming down Ezra’s face.  When his entourage finally filed down the aisle, men and women waved handkerchiefs and grasped the visitors’ hands in an action that spoke more than words.  Spontaneously they began to sing “God Be With You Till We Meet Again.”  The language was foreign, but the tune and meaning were unmistakable.  The Americans entered their cars with not a dry eye among them.  Finally, a newsman broke the silence, commenting, “I believe they were the only really happy people we saw in Russia.”

“I shall never forget that evening as long as I live,” Elder Benson later wrote.  “Seldom, if ever, have I felt the oneness of mankind and the unquenchable yearning of the human heart for freedom.”  Others felt similarly.  Cynical newsmen who had complained about “going to church with Ezra” (and who had skipped out on LDS services in West Berlin) stood and wept openly.

Tom Anderson, editor of Farm and Ranch magazine, wrote, “Imagine getting your greatest spiritual experience in atheistic Russia!….The Communist plan is that when these ‘last believers’ die off, religion will die with them.  What the atheists don’t know is that God can’t be stamped out by legislated atheism….This Methodist backslider who occasionally grumbles about having to go to church, stood crying unashamedly, throat lumped, and chills running from spine to toes.  It was the most heart-rending and most inspiring scene I’ve witnessed.”

When they reached the airport, nearly all of the newsmen traveling with Ezra told him it had been the greatest spiritual experience they had ever had.

–“Ezra Taft Benson, A Biography,” by Sheri Dew (Deseret Book, 1987), pp. 342-344

Dear friends,

Good news!  For the first time, the federal government (BEA) has released the “top line” gross output (GO) at the same time as the “bottom line” GDP.  For years, publicly-traded companies have simultaneously posted the top line (sales/revenues) and the bottom line (earnings/net income) every quarter.  Now finally the government is releasing GO and GDP every quarter in national income accounting.

Economics finally caught up with accounting and finance!

I call GO the missing piece in the macroeconomic puzzle.

Several events mark the GO-Day Celebration.

1. The Wall Street Journal published my op on this milestone in national income accounting on Saturday, October 3. The WSJ op ed is published on line and in the print edition. This is the third time they have carried my articles on GO. See the article in full below.

2. Steve Forbes released his 3-minute “What’s Ahead” podcast on “Gross Output vs GDP: Which Measure is Better?” — it’s the best summary of GO I’ve ever watched. Watch it here: https://www.youtube.com/watch?v=WoYF-ous_mU

3. My press release offers more detail and useful charts at www.grossoutput.com.

4. In celebration of this special occasion (the first time the government has released GO and GDP on the same day), I hosted a 1-hour webinar on GO Day with panelists Steve Forbes, Sean Flynn (Scripps College and primary writer of the McConnell Brue Flynn textbook), David Ranson (chief economist, HCWE, Inc.), and Steve Hanke (Johns Hopkins University). The webinar was courtesy of Chapman University.

You can watch it here: https://chapman.zoom.us/rec/share/KJ17YjuR_6zthmgOA5fNprv2e65F-jICOsf430bJvnu8qWzdPYPfTohPC48qRLe9.Q8rmnlXynnTN74Tv?startTime=1601488807000

More economic analysts are now using it the forecast economic growth and the stock market, including David Ranson (HCWE, Inc.) and Jerry Bowyer, CEO of Bowyer Research. To read how they use GO in their forecasting models, go to “What Others Are Saying” at www.grossoutput.com.

New Stat Augurs Well for Covid Recovery

Gross output measures business confidence better than GDP. It’s fallen less than in past recessions.

By Mark Skousen
WALL STREET JOURNAL, Oct. 2, 2020

Wednesday was a big day for anyone with an eye on the economy. For the first time, the Bureau of Economic Analysis (BEA) released the “top line” gross output, or GO, at the same time as it published the “bottom line” gross domestic product. And the GO data brought a welcome surprise: It shows the economy is much more resilient than it looked.

Analyzing GO and GDP simultaneously is an essential way to know what is really going in the economy. The key is that GDP accounts for final output only: the finished goods and services bought by consumers, business and government. In contrast, GO measures total spending at all stages of the supply chain.

Steve Forbes offers a useful metaphor: “GDP is like an X-ray of the economy; GO is like a CAT-scan.” GO reveals a deeper level of economic activity and is therefore helpful in predicting the direction of growth, not only its current state.

GO is especially significant during downturns. In past recessions, GO declined much faster than GDP and gave an earlier view of the depth of the recession. During the financial crisis in the fourth quarter of 2008, GO fell 6.6%, compared with a 2% drop in GDP—more than three times as fast. The GO decline showed that even while consumer sales held up, businesses were slowing investment in future production.

In 2020, that trend is clearly reversed. In both the first and second quarters, GO fell slightly less than GDP. In the second quarter, real GO declined by 8.4% while real GDP decreased by 9% (in quarterly, nonannualized terms). GO didn’t collapse by multiples of GDP as it has in past recessions. The decline was close to 1-to-1, rather than 3-to-1.

What does this tell us? It’s clear that consumer spending dropped sharply in 2020 as a result of the lockdown, but businesses looked toward the long term, expected a recovery, and adjusted accordingly.

Jerry Bowyer, CEO of Bowyer Research, described the trend to me: “The lockdown was focused on sectors which were skewed towards final stage consumption, such as retail, entertainment and travel. Seeing that the shutdown was disproportionately skewed towards GDP world as opposed to the phases before that phase (GO), showed how the economy would be able to be more resilient in bouncing back than many anticipated.”

That’s good news, suggesting the recovery from this recession will be faster than most analysts thought. The sooner states open up their economies, the faster we will see a return to a dynamic American economy.

I do have one suggestion for the BEA: They need to report GO even more quickly each quarter. Have it come out the day the first estimate of GDP is released, not the third. Information is power.

Mr. Skousen is a presidential fellow at Chapman University, editor of Forecasts & Strategies, and author of “The Structure of Production.”

Online: https://www.wsj.com/articles/new-stat-augurs-well-for-covid-recovery-11601678216?mod=opinion_lead_pos7″>https://www.wsj.com/articles/new-stat-augurs-well-for-covid-recovery-11601678216?mod=opinion_lead_pos7

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Appeared in the October 3, 2020, print edition.