September 8, 2020

Trend Watch and New This Week

All of the key virus-related data continued to improve this past week, including the number of COVID-19 tests (slide 3). Within the data, the number of patients on a ventilator appears to have leveled off during July and August (slide 5), which should lead to continued improvement in death rates.

Small businesses have been greatly impacted by the pandemic. According to data from e-commerce platform Womply, the number of small businesses is down nearly 20% (slide 6).

The length of workers’ shifts—based on work-time punches—are steadily increasing, which translates to more take-home pay for hourly workers (slide 7).

Bottom Line

Activity-based data has reaccelerated generally in late July and early August. This is especially encouraging when coupled with strong trends with employment data. Most notably, US payrolls increased by 1.4 million during August, while the unemployment rate declined nearly two full percentage points to 8.4%. Roughly half of the jobs lost during the pandemic have been recovered in past four months. That is further validated by a steady decline in the weekly initial jobless claims, which fell below 900,000 for the first time since mid March.

We remain concerned, however, that many of the businesses in the harder hit industries and regions may not survive. Small businesses, as illustrated by the Womplydata (slide 6), remain particularly vulnerable. This is especially true for activities that require crowds, such as travel, movie, live productions and sporting events, which remain well below historical norms.

Overall, we are generally optimistic about the recovery path, which should resemble Nike’s iconic swoosh as the recovery process will take time and feel like a much longer journey. As we have repeatedly said, the US economy took the elevator down to the basement, but is taking the stairs on the way back up. Furthermore, the recovery will continue to be uneven—both by industry and region.