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8.A. - Page 31 of 42 The economic conditions discussed below help inform the Preliminary Ten -Year General Fund Forecast. During normal times, the Preliminary Ten -Year General Fund Forecast would paint a helpful picture of the future economy of the City. However, the many structural economic changes that could result from the pandemic cause the conclusions drawn from the Preliminary Ten -Year General Fund Forecast to be uncertain and susceptible to fluctuations. Staff have drawn information from a variety of sources, including Marin Economic Consulting, PFM Asset Management, LLC, and the California Legislative Analyst's Office, to help inform the Economic Update presented below. National Gross domestic product (GDP) is the primary measure of the size of the national economy. Marin Economic Consulting has reported: "Throughout the pandemic, GDP has been below where it would otherwise would have been. The fourth quarter of 2019 was the last quarter of economic activity unaffected by the pandemic. It was early in 2020 that the implications of the pandemic first became apparent and the economy began its contraction. Although the first two months of the first quarter of 2020 were largely unaffected by the pandemic, the implications for March were so severe that real, or inflation adjusted GDP declined by 5 percent on an annualized basis. It was the second quarter of 2020 when the contraction was particularly sever, with real GDP falling by an additional 31.4 percent. As the economy opened back up, real GDP rebounded with growth of 33.4 percent. Despite the dramatic rebound, the level of real GDP remained 3.4 percent below what it was at the end of 2019. It was even further behind where GDP would have been had the pandemic not occurred. At the end of 2020, with another increase in GDP of 4 percent, the level of GDP remained 2.5 percent below the end of 2019, but 4.6 percent below where it might have otherwise been (97.5 versus 102.1 in the chart below). GDP During the Pandemic 106 102.1 100 98.7 96-6 7-5 96 89.E 86 00.10 01-M C2_0 G 01-21 - AcWW GDP P1oj�cl�d(30R �611�iG �+� of E86.o�frt Jy1/Ir� 0imphpp Maio -ft f co""crM 041JUNN*fmWw1VMD*hN041WOW Changes in GDP are primarily driven by changes in consumer spending. Consumer spending comprises roughly 67 percent of GDP, so changes in spending can have a big impact on GDP. As expected, consumer N 562