I was asked this morning whether it mattered that UK GDP might be 25% down this quarter.
My answer to the question was that in principle it did not. GDP is a measure prepared in three ways. For the current purpose the important fact is that it reconciles measures based on both production and sales. And the reality is that both are going to be down by a staggering degree right now. But because both are down, and we know why, it could be argued that this is of little consequence, in itself. It could be considered a blip, but only on the basis fo making one massive assumption. And that is that productive capacity survives this.
GP is any one of the three of all production, all consumption or all incomes. All three are, by design, equal to each other. So, a 25% decline in GDP means a 25% decline in consumption. It cannot be any other way.
This man used to teach economics at a British university.