In this Sept. 2, 2020 file photo, pedestrians walk past a business storefront with store closing and sale signs in Dedham, Mass. The U.S. economy plunged at a record rate in the spring but is poised to break a record for an increase in the just-ending July-September quarter. The Commerce Department reported Wednesday, Sept. 30, that the gross domestic product, the economy’s total output of goods and services, fell at a rate of 31.4% in the April-June quarter, only slightly changed from the 31.7% drop estimated one month ago. (AP Photo/Steven Senne)

Though the president and first lady weren't able to dodge the COVID-19 bullet, the U.S. economy, we now know, has adapted remarkably well to the pandemic and social distancing. As a result, the worst of the COVID-19 recession is over.

Fear pushed public and even professional opinion to be bearish about the prospects of economic recovery. On both sides of the aisle, it became commonplace to assume that economic vitality depended largely on financial aid from Washington.

Therein lies a Catch-22 that's keeping us from paying attention to the economy's rebound. If markets and the economy recover or perform well, the conventional wisdom attributes this to government "stimulus." If they stagnate or perform poorly, it's attributed to Washington's sloth and stinginess. In short, we've been too focused on vulnerability — and the perceived need for artificial stimulation — and not focused enough on resilience.

Real GDP dropped like a stone in the second quarter (April-June) of 2020, at a record annual rate of 31.7 percent. The great majority of forecasters did not anticipate that we could recover from such a blow anytime soon — even taking into account unprecedented government largesse. Their predictions of sustained weakness are being overtaken by events.

Weeks ago the largest component of gross domestic product, consumer spending, already had bounced back to pre-pandemic levels, recovering twice as fast as employment or industrial production. Within just two months, May and June, retail sales had completed a full round trip. In July and August they rose further.

How well does this good news reflect the economy as a whole? That requires an estimate of GDP itself. With forecasters in broad disagreement, it might seem that we'll have to wait until third quarter results are in.

Happily, thanks to the Center for Quantitative Economic Research at the Federal Reserve Bank of Atlanta, there's now a more timely source of information, unavailable in past downturns, and derived from real-time hard data: the bank's GDPNow estimate. As of Sept. 24 the GDPNow team calculated third-quarter annualized growth of 32 percent.

This figure exceeds all but three of the 62 forecasts in The Wall Street Journal's September survey of forecasters, and reflects a huge upward revision from GDPNow's earliest estimate at the end of July.

Such quarter-to-quarter growth would be twice the record set by the Korean War buildup. And it implies that the economy already had recaptured three-fourths of its second-quarter collapse in a single quarter.

The speed and vigor of the U.S. rebound can be interpreted in two contrasting ways. One is that federal intervention has been much more effective than expected. There will be no shortage of politicians waiting to take credit for that. The other is that, collectively, virtually all of the so-called experts underestimated the economy's intrinsic resilience.

Back in the days when federal "stimulus" was puny by today's standards, GDP already showed an ability to bounce back from drastic financial shocks, natural disasters, widespread strikes and global crises. To paraphrase Independent Institute senior fellow Richard Vedder, professor emeritus of economics at Ohio University, perhaps the most impressive example is the economic transition following demobilization at the end of World War II. Millions of military personnel became jobless within months and military spending plummeted. But the economy's resilience came to the rescue and the predicted sharp rise in overall unemployment never occurred.

It's not clear whether government "stimulus" funds add to or subtract from the economy's resilience. Relief to those among the newly unemployed who are too pressed to fend for themselves may actually help them become more resilient. On the flip side, moderate deprivation may be a greater spur to self-reliance, encouraging the unemployed to seek work rather than temporary income from government.

Either way, the resilience of the U.S. economy is overpowering the COVID-19 recession, which soon could be history.

David Ranson is a research fellow at the Independent Institute and director of research at HCWE & Co. He wrote this for

(14) comments


I would hope that people learn from this but they probably won't. Save early and often and plan for times where one may not have an income. The rough rule of thumb was to have at least 3 to 6 months expenses saved for emergencies. If you're more conservative, you should build up to a year's worth of savings. Don't live paycheck to paycheck and certainly don't have children you really can't afford even in the best of times.


Agreed md1756. Put away something...anything for a rainy day. There is no reason not to. Aim for 10% of your paycheck, and after a while you'll never miss it.


Agree. I used to tell new hires to sign up for the 401k with employer match first thing so that they would never miss it. Some did. Some didn't. Some of those who did have stayed in touch over the years and are sitting on a nice nest egg when retirement rolls around.

Or, you can sit back and wait for Harris- Biden to confiscate the wealth of rich people and distribute it to the poor. Yeah. That'll work.



MD1756, requires common sense, it'll never fly. Let's just confiscate money from the wealthy and give free stuff to everybody, including illegal aliens.(sarcasm alert)


Greg F

Oh here’s Bonzo with the “here come the commies” mantra.


The working poor would like your thoughts on exactly how to accomplish this.


It is exceedingly hard to do with so little leftover (if any) from paycheck to paycheck. I also cringe seeing people buying into hitting the Lottery and feel that is both a waste of money and a cash cow for our 'compassionate' State.


The working poor should read "The Richest Man In Babylon". A high school teacher recommended it and it changed my outlook on personal responsibility and finances. [ninja]


With disciple, it is easy (as long as you haven't already started popping out children you can't afford). EPA had a program where we used to mentor young adults from SE DC. I worked with them to improve their finances. It starts with a budget and monitoring you expenditures (needed versus discretionary). If, for example, you took the money spent on a cup of starbucks coffee each day, get the cheap $3 and save it instead, by the end of 40 year you'd have over $132,000. Now if your tastes are more expensive or you're more thirsty and spend $5/day then you'd have over $220,000 by age sixty if you started when you were 20. On the cost cutting side, your greatest expense is housing related, so get roommates. Those who have children they cannot afford are practically condemning their children to poverty (there are of course exceptions but there is a much greater likelihood you've placed your child at a great disadvantage).


MD1756 [thumbup][thumbup][thumbup][thumbup][ninja]

Greg F

Hard to plan when you are paid minimum wages that have been the same for decades....or you have healthcare issues or any other strife. Unless of course trump gives you millions in tax relief.


Decades in minimum wage jobs? Must not have any marketable skills at all to offer in the marketplace. Pay attention in school, stay in school, and put some pep in your step. [ninja]

Greg F

The author here is clearly living in a parallel universe of roses and unicorns.


I agree that for many of us life is climbing back up, but for millions of us it is not. The rent is due, the utilities are under threat to be turned off, and people are still out of jobs. The entertainment and tourism industries in particular are trashed. My son - a singer with a nationally regarded and once solvent opera company - has been out of work for months and the season has been canceled so he won't be back to work for many more months, if the company survives. The airlines are begging openly for bailout money. The Chairman of the Fed just testified we will NOT recover very well without a big influx of help to those who need it - you remember them, the people who spend the money that keep "the economy" going.

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