It's the time of the year when corporate and government finance people start to see the complete picture for 2020.
With just a couple of weeks to go in the year, they know by now just how the year will finish. Yes, there can be some last-minute surprises. But by and large, the dye is cast. The really big numbers are done.
Will the year be positive and profitable, or will it be a financial disaster? You can bet that the guys who wear green eyeshades, the accountants and financial officers have already taken the long walk to the executive suite, to let the Company's CEO just how to prepare for that annual meeting.
And although the titles are a little exactly the same thing is happening over at 1500 Pennsylvania Avenue, The US Treasury Building. Treasury Secretary Steven Mnuchin, already knows what the numbers are for 2020.
And like a giant ship under full steam, the US Economy will not change course in the last 2 weeks.
So, I'd like to give a preview of just how 2020 is shaping up for the United States Economy. And specifically how we're doing compared to our chief economic rival China.
Now, China is a particularly poignant comparison because like the US they too suffered through the Covid 19 Pandemic. In fact, it is generally understood that the Virus began in the City of Wuhan.
So China and the US are good measures of the comparative progress that each country made in this disease plagued year.
Now I've chosen to measure each economy by its Gross Domestic Product. That is the sum total of all goods and services produced in that economy. And I'll round off all the numbers.
Using GDP as the measure, the United States has been the leading economy in the world for several generations. While China has been the fastest-growing economy in the world in the 21st Century. In fact, in the last decade, China's economy has grown 2 ½ times faster than the USA.
But as dramatic as those numbers are, this year, in 2020, we're seeing a real inflection point. A point at which the Chinese economy has, in a relative sense, rocketed forward. While the US economy, when all is said and done, will have shrunk this year.
The International Monetary Fund, estimates that for 2020 the US Economy will have actually declined by 8%. While the IMF estimates that the Chinese Economy will have GROWN by nearly 2%.
That's a 10 point swing in the two country's fortunes. And the largest advance by China in recent memory.
Briefly put: The United States just went through one of the steepest recessions in the past generation. While China sailed through the year with solid, although far from spectacular, economic results.
The American economy saw an absolute decline, while the Chinese economy actually grew. In a situation like this, where the two country's results are so divergent, one wonders if there wasn't some strategy behind all this? But we'll leave that for the political scientists and historians.
For us, the real question becomes: What's our strategy, how will we get out of the economic mess?
It is clear, both from the absolute numbers and from our performance relative to China, our great economic rival, that the US is currently in a tailspin.
The policies of the now nearly complete 2020, were an economic disaster. Self Quarantine, social distance, non-essential business closings, together produced one of the worst “economic years” in memory.
2020 at least rivaled the Great Financial Recession of 2008. And what's worse, we may not be through with the economic bad times.
Further, if some of our politicians are to be believed, they're prepared to do the same as they did last year, only more so. More closings, more lockdowns, more quarantines.
I have to wonder, if their “cure” is not worse than the “disease.”
From an economic perspective, there can be little doubt that is the case.