Since the pandemic began, disruptions in business activity have varied greatly from region to region, and often from one week to the next, according to the severity of local Covid-19 outbreaks. Unfortunately, many of the official government statistics used to gauge the health of the U.S. economy are backward looking and somewhat delayed.
Changes in the nation’s gross domestic product indicate the rate at which the economy is growing or shrinking, but the first CDP estimate is not published by the Bureau of Economic Analysis until about one month after each quarter end. GDP increased at a 4.3% rate in the fourth quarter of 2020 but posted the worst annual decline (-3.5%) since 1946.
Rapid changes in virus conditions can make many of the monthly reports that gauge employment, consumer spending, and production seem outdated and irrelevant by the time they are released. Consequently, economists and investors have been focusing on more timely data sources to monitor the economic impact of the pandemic throughout the nation. This information is reported every week, and in some cases every day, by government agencies or private companies with access to key business insights. Here are some of the high-frequency indications that may be helpful in evaluating the progress of the economic recovery.
A weekly report from the Department of Labor includes the number of new claims for unemployment insurance benefits under state programs filed by workers who recently lost their jobs, as well as the number of continuing claims filed by those who remain unemployed. This provides an early look at whether the labor market is improving or worsening on a national basis. The ASA Staffing Index from the American Staffing Association tracks weekly changes in temporary and contract employment. Many employers rely on temporary help before hiring additional permanent employees, so staffing agency trends tend to lead nonfarm employment by three to six months.
The proprietary Johnson Redbook Index captures consumer spending trends based on weekly data from a representative sample of thousands of large general merchandise and apparel retailers. The reservation app, OpenTable, has been monitoring the impact of Covid-19 on the hard-hit restaurant industry, providing data that doubles as an indicator of the openness of local economies around the world. Daily data shows changes in the number of people dining at restaurants compared with the same day of the same week in 2019. As of March 28, 2021, the weekly average number of U.S. seated diners was still down 29% from 2019, but had bounced back considerably from the last week in February, when the average was 40% below 2019.
Other technology companies have rolled out tools designed to help public health officials and policymakers around the world monitor day-to-day mobility trends with data collected from smartphone apps. Google’s Community Mobility Records show changes in visits to places like grocery stores, retail shops, and parks.
Apple’s Mobility Trend Reports show changes in routing requests (since January 2019) for walking, driving, and public transportation trips. The number of people who pass through U.S. airport checkpoints is posted daily by the Transportation Security Administration.
In May 2020, Opportunity Insights, in partnership with several private sector providers of high-frequency data, launched a real-time Economic Tracker as a free public service. Interactive charts show day-to-day changes in U.S. debit and credit-card spending, small business revenue, employment, online job postings, and time spent outside the home. In addition to nationwide statistics, disparities in progress can be broken down by income and industry, as well as by state or metro-area.
The Weekly Economic Index, which is published by the Federal Reserve Bank of New York, signals the state of the U.S. economy based on 10 different indicators of consumer behavior, the labor market, and production that are available daily or weekly. In addition, the Federal Reserve Bank of Atlanta keeps a running estimate of GDP changes, GDPNow, that is updated based on a model that incorporates incoming economic data. These estimates are based on current conditions, are subject to change, and may not come to pass. Neither is an official forecast of the Federal Reserve.
The dynamic nature of virus and vaccination data causes frequent changes in economic impact and projected recovery. Economists, analysts, and policy makers rely on up-to-date information and base their decisions on these. When reviewing your own portfolio, you can access some of the same data and base your decisions appropriately.