July 24, 2020

Trend Watch and New This Week

On the US COVID-19 virus front, the rate of new cases and hospitalizations appear to be cresting, perhaps due to increased masking and continued social distancing. However, the death rate has ticked higher.

After softening in early July as new cases surged around the country, activity-based data has generally begun to firm. For instance, companies are once again hiring temporary workers (see slide 6), which is a harbinger of eventually increasing permanent jobs. Housing data has also quickly rebounded, including back-to-back outsized jumps for new home sales.

Yet, the number of air passengers has slumped for the past two weeks (see slide 8) and movie box office has declined as more states pause reopenings.
Meanwhile, colleges and university reopening plans are mixed (see slide 7). Lastly, we take a deeper dive into consumer spending by income, which shows that spending in low-and middle-income areas has held up better than in high-income areas (see slide 9).

Bottom Line

The reopening of the US has been sluggish and uneven—both geographically and by industry. After weeks of mandated lockdowns, many activity-based economic data points climbed in late May and early June as states began the process of reopening. Most showed a sustained, dramatic increase from very low levels; however, most remain well below pre-COVID levels.

Now, as new infections increased in parts of the US, the pace of reopening has moderated somewhat. Conversely, the massive independent efforts to develop a vaccine and therapeutic treatments are unprecedented. We continue to anticipate a shorter but deeper than average recession, resembling Nike’s iconic ‘swoosh’ logo. It will likely take until early 2022 to regain the lost ground.