Summary: With Rick Newman, Senior Columnist for <a href="https://www.yahoo.com/author/rick-newman/" target="_blank" rel="noopener noreferrer" data-cke-saved-href="https://www.yahoo.com/author/rick-newman/">Yahoo Finance</a><br> Steve spoke this week with <a href="https://www.yahoo.com/author/rick-newman/">Rick Newman</a>, Senior columnist for Yahoo Finance and seasoned author, about the economic responses to the current COVID-19 pandemic and what they imply for world and personal finances.<br> Ignoring The Horrific Economic Numbers<br> Everyone is panicking a little in light of the current coronavirus pandemic, and this panic has been reflected in the economy. But Rick has recently written <a href="https://finance.yahoo.com/news/ignore-these-horrific-sounding-economic-numbers-161349787.html">an article</a> which encourages people to ignore most of the horrific-sounding economic numbers being circulated. “The terror really began with Goldman Sachs predicting a 24% decline in the second-quarter GDP,” Rick said. But the truth that we really need to pay attention to is that history is the greatest of teachers. “The Great Depression is really our benchmark for how bad the economy can get, and the worst decline our country experienced in GDP during that time was 14% in 1932,” Rick continued.<br> Morgan Stanley predicted an even greater decline of 30%. But what both Goldman Sachs and Morgan Stanley are talking about is a change in the GDP from the first fiscal quarter to the second fiscal quarter on an annualized basis.<br> “But it’s that annualized basis that’s screwing everything up,” Rick pointed out. There are reasons to annualize a quarterly figure under normal circumstances: it identifies an economic pace to give an indication of what the rest of the year will look like. But during this coronavirus pandemic, things are just not normal. “We could see significant GDP declines, but no economist thinks that the entirety of 2020 is going to decline by 24% to 30%. That would require the GDP to fall that percentage for four quarters in a row,” Rick said. He noted that the general consensus is that 2020’s GDP will fall by about 5% compared to 2019, which is terrible but not as bad as some of the figures make it seem.<br> Steve pointed out that skewed numbers affect the investment world, too. “You could look at your returns and be up 10% for the quarter. But that doesn’t mean you’ll be up 40% for the year.”<br> Putting Annualization Into Context<br> Rick used the auto industry as a good example of annualizing numbers. The idea is to get the pace of sales. “In February, the pace of sales was 16.6 million vehicles. But what most forget to say is that auto dealers didn’t sell 16 million vehicles in February. That figure is the seasonally adjusted annualized rate or SAAR. It gives everyone an idea of how sales are paced this year versus last year. In 2019, the figure was 17.1 million vehicles. This means the pace of sales slowed a bit. But it’s not helpful to use annualized figures during dramatic world changes and the reference point is totally out of whack.”<br> Steve concluded, “I think Morgan Stanley and Goldman Sachs should have reported those numbers differently.” In reply, Rick pointed out, “But the fact is that those two giants were talking to each other. It’s Wall Street research for Wall Street analysts. That’s why we feel it’s important to provide context. With context, it’s not as bad as some of the numbers would make it seem.”<br> Employment Numbers<br> Steve asked Rick about <a href="https://finance.yahoo.com/news/we-may-have-lost-21-years-of-job-growth-191335474.html">another article</a> he’s written, ominously entitled, “We May Have Lost 21 Years of Job Growth.” The coronavirus pandemic is really hitting employment numbers the hardest. “Some employment numbers are out-of-date because it’s a government survey that comes out about two weeks behind the survey. Under normal circumstances,
