Trend Watch and New This Week
The virus-related data continued to improve (see slide 3). The number of COVID-19 tests have begun to rise slowly after stalling for several weeks. This should increase in the coming weeks as more companies, colleges and schools are rolling out testing protocols. Additionally, the FDA just approved a cheap new saliva test that promises results in a few hours.
On the negative side, schools—whether K-12 or colleges—are clearly struggling with reopening efforts. Colleges are particularly wrestling with distancing, testing and infections. Two large institutions that opened in recent weeks backtracked, switching from in-person to virtual approaches. This will weigh on overall economic activity.
More state and local governments are now requiring face masks, especially in indoor settings where physical distancing is difficult. The percentage of Americans under such requirements is nearing 90% (slide 5).
More positive trends on the freight front. Cargo container data at the two largest US shipping ports—Los Angeles and Long Beach—reaccelerated in July. This mirrors three months of strong retail sales. Looking ahead, August and September are critical months for shippers and warehousing, which are beginning to receive holiday sales inventory for retailers.
Lastly, Americans’ willingness to eventually return to some activities has steadily waned, according to recent polling (slide 7). With polls showing 50% are willing to attend a sporting event, this may have contributed to the cancellation of many fall college sports in the past week.
The continued improvement in virus-related data along with the uptick in July freight figures are encouraging. These trends, along with other activity-based data, suggest an overall reacceleration in August.
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.