Key Takeaways
- Since our last report, real-time data has shown the number of coronavirus cases, hospitalization rates, and death rates in the U.S. have eased, and vaccinations have picked up.
- However, mobility measures have been slipping, as has consumer spending, and fears about new variants of COVID-19 may keep consumers away from restaurants and planes for longer.
- Overall activity, as measured by the New York Fed's composite Weekly Economic Index, came in lower than its 13-week average, a first such hiccup in the current recovery.
Table 1
| Summary Of Indicators | |
|---|---|
| Indicator | How the data looks |
| Aggregate current activity | |
| Weekly Economic Index | The WEI stood at -2.28% compared with a year ago in the week ended Jan. 23, which translates to a 13-week moving average of a 2.28% decline in real GDP over the four quarters. The drop in WEI in this week was partly due to a rise in initial unemployment claims compared with the same period last year, offsetting an increase in railway traffic. Meanwhile, real GDP contracted 2.5% year over year in fourth-quarter 2020, as per the BEA's advanced estimate. |
| Virus, vaccines, and mobility | |
| Status on business restrictions by states | As new cases started to drop in the past two weeks, business restrictions also eased. Most of the states are now opened, except New Mexico and Oregon, where businesses are mostly closed, particularly touch-sensitive businesses. |
| New COVID-19 cases | Total COVID-19 cases already crossed 25.6 million, while average new cases dropped by around 30% per day from the average of two weeks earlier. 40 plus states are seeing a decrease in new cases. |
| Hospitalization rate | Amid a slowdown in new cases, we saw the hospitalization rate also start to dip in the past week after reaching a record high. However, the number of deaths continues to reach new highs. Yet the fatality rate, which is the number of deaths divided by total positive cases, remains below April-May, suggesting better knowledge of treating the virus and changing mix of infected (larger younger proportion). |
| Google mobility | Mobility for retail and recreation remains weak, still 25% below the precrisis level and around 5% below the December level. Also, mobility in California and New York is still below 35% and 30%, respectively, while in Texas and Florida it is nearly 20%. The divergence in mobility between states signals that people are still cautious about COVID-19. |
| Vaccination | Nearly 24.7 million vaccine doses were administered as of Jan. 27, which was nearly 7.1% of the total population. The vaccination rate has picked up in the past week. Now, more than one million vaccine doses are administered every day, and this is the goal for the Biden Administration's first 100 days in office. |
| Consumer spending | |
| Johnson Redbook Index | Johnson Redbook same-store retail sales growth picked up to 3.9% year over year for the week ended Jan. 23, after averaging 2.2% growth in the previous two weeks. |
| Consumer loans: credit cards | Consumer spending dropped further in the second week of January as a spike in new cases weighed on the important consumer sector at the start of first-quarter 2021. |
| High- and low-income household spending (credit card) | That said, spending by low-income households jumped in recent weeks, while high-income household spending remains sluggish. This reflects divergence between spending by high-income households and low-income households, partly due to lack of discretionary spending by high-income households, especially travel- and tourism-related spending. |
| Consumer sentiment | Consumer confidence remains weak as consumers are still wary about the future of the virus and the economy. |
| People-facing COVID-19-sensitive sectors | |
| Open Table | Restaurants as of Jan. 25 are still operating at 60% below levels from the same time last year. Restaurants in California and New York are 93% and 78% below, respectively. |
| Air traffic | Air traffic stayed subpar, 65% below levels in the same period last year. And recently, government-extended entry bans for most of European nations and Brazil reflect continued headwinds for the sector from the pandemic. |
| Current and future activity | |
| Energy demand | Higher oil prices have caused U.S. energy firms to increase drilling activity, with U.S. oil rigs rising last week to their highest since May, while U.S. refiner and blender adjusted net production recovered. That said, rig counts have a long way to go before full recovery to pre-pandemic level. |
| Raw steel capacity utilization | Raw steel capacity utilization has been improving at a much faster pace in recent weeks, though it dipped by a percentage point last week. Improvement in raw steel production and capacity utilization coincides with a strong rebound in industrial activities in the U.S., supported by a pickup in domestic demand as well as external demand for goods. |
| Rail traffic | Rail traffic growth remained strong since the third quarter of 2020 and stayed well above the 2019 average. This also reflect sustained recovery in rail transportation on the back of reopening of businesses, underpinning solid domestic demand. |
| Home mortgage applications | Mortgage applications remained elevated, underpinning the booming U.S. housing market. Demographic tailwinds, combined with low mortgage rates, changing geo-preferences, and the fact that job losses have been concentrated in lower-wage occupations have helped drive demand. |
| Prices | |
| Lumber futures | Lumber futures slowed in the past week, after surging to a four-month peak, perhaps signaling a slight correction in the lumber futures market. But the prices are still high, reflecting solid housing market demand, besides tight supply. |
| Industrial Metal Price Index | Industrial metal prices moved up and reached a two-year high amid a steady recovery in industrial activities. Further, the Biden Administration's announcement of an additional $1.9 trillion stimulus package and infrastructure spending pushed commodity prices higher, especially industrial metal. |
| Labor market | |
| Jobless claims, job openings | Initial jobless claims dipped by 7.3%, or 67,000, for the week ended Jan. 23, compared with the previous week, to 0.847 million, but they were still significantly higher than the 2019 average of 217,000 claims per week. Continuing Pandemic Unemployment Assistance (PUA) claims, which lag initial claims by two weeks, jumped 1.6 million in the week ended Jan. 9 to 7.3 million. In the second half of December, job openings on Indeed.com were 10.2% below the same time a year ago, a slight improvement from the first half of December, when it was -11.2% average. |
| Financial market | |
| Financial Stress Index | Financial conditions remained favorable (eased) on the back of unprecedented monetary and fiscal stimulus. Meanwhile, the 10-year bond yield has retraced 10 basis points in the second half of January so far, after picking up 20 basis points in the first half of January amid stimulus extension. |
Since our last real-time economic data report (see "U.S. Real-Time Data: COVID-19 Is Still Calling The Shots," Jan. 15), coronavirus cases, hospitalization rates, and death rates in the U.S. have started to ease from their recent highs (see charts 1-2). The pace of vaccines administered has picked up to over 1 million per day (see chart 3). The Biden Administration increased its target to 1.5 million COVID-19 vaccinations per day, from 1 million. Most states remain open and, importantly, California--the country's largest state economy--has started to reverse some of its restrictions that were in place in December and the first half of January (see chart 4).
Mobility measures across the nation have been slipping since the spike in coronavirus cases around the holidays. Consumer spending in retail stores also slowed in January (see charts 5-6). Perhaps both will start to strengthen again in the coming weeks with the acceleration in vaccination rollouts and extension of income support.
In fact, government income support, such as the additional one-time transfer payment of $600 and extended unemployment benefit booster, combined with extension of various moratoriums (student loans, housing), raised spending by lower-income households. Opportunity Insights' Economic Tracker shows that the effects of stimulus payments signed into law in late December increased spending among lower-income households significantly but had little impact on higher-income households' spending (see chart 7).
Still, the fear for now is that new variants of COVID-19 may lead to more cases. An increase in the number of cases will put more strain on health care resources and lead to more hospitalizations, and potentially more deaths. Perhaps that's why consumers don't yet see a reason to perk up (see chart 8). Not surprisingly, restaurants and air travel continue to struggle (see charts 9-10). Together, they led to fewer credit card swipes, which translated to declining overall consumer credit (chart 11). Some part of accumulated excess savings may have also gone to paying down debt.
What hasn't changed in the last 15 days is that demand for industrial supplies continues to recover, and factories are increasingly utilizing their capacity to fulfill growing internal and external demand. And railway traffic is humming again as the trade of goods steadily recovers (see chart 12). Prices of industrial supplies have increased in tandem, including oil prices. Oil prices are now above $50/barrel (WTI), which could be a lifeline for the sector, where rig counts have started to increase but remain well under pre-pandemic levels (see charts 14-15).
Applications for new business formations and home purchase mortgages continue to surprise on the upside (charts 16-17). Demand for homes has outstripped supply, which has led to builders staying busy and optimistic in their outlook (see "U.S. Biweekly Economic Roundup: Stir It Up," Jan. 22). Lumber prices in the futures market remain elevated, even as they traced back some of the gains in January (chart 18).
New business applications have held their ground since sharply rebounding from the initial decline. As a new working paper from the Atlanta Fed (Dinlersoz et al., 2021) puts it, projected transition from new business applications to businesses with employees also rise, "but this projection is dampened by a change in the composition of applications in 2020 toward applications that are more likely to be non-employers." The authors find a composition shift in new business applications, relative to the recovery from the global financial crisis, and suggest that the surge in new business applications in 2020 is likely to yield a more substantial increase in new non-employer businesses relative to new employer businesses.
In the near term, the virus controls the speed of economic recovery, which was evident in unemployment claims data, with first-time jobless claims in the week ended Jan. 16 and continuing claims for the week ended Jan. 9 remaining elevated (charts 19-20). One complication when trying to map claims to the real economy is the extension of fiscal support through March (passed two weeks ago in the $900 billion support package) that reinstated eligibility for many unemployed. This likely meant that many of the ostensibly first-time claims were by previously unemployed people resuming their benefits, as opposed to those who just lost their jobs. Improvement in job openings on Indeed.com also slowed down heading into 2021 (see chart 21).
All told, a widely followed composite indicator of real-time economic activity--from the New York Fed--indicates that recovery slowed in the latter part of the fourth quarter and into January (see chart 22). For the first time in this recovery, the weekly average was below the 13-week moving average--not a good start for first-quarter GDP growth, even as financial conditions remain extremely accommodative (see chart 23).
Table 2
| Overall U.S. COVID-19 Vaccine Distribution And Administration | ||||||||
|---|---|---|---|---|---|---|---|---|
| Total doses distributed | Total doses administered | No. of people receiving one or more doses | No. of people receiving two doses | |||||
| 47,230,950 | 24,652,634 | 20,687,970 | 3,801,053 | |||||
| Note: Because there is some missing data for dose number, the sum of people receiving one or more doses and people receiving two doses will not exactly equal the total doses administered. Data as of Jan. 27, 2021. Source: CDC. | ||||||||
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The views expressed here are the independent opinions of S&P Global's economics group, which is separate from, but provides forecasts and other input to, S&P Global Ratings' analysts. The economic views herein may be incorporated into S&P Global Ratings' credit ratings; however, credit ratings are determined and assigned by ratings committees, exercising analytical judgment in accordance with S&P Global Ratings' publicly available methodologies.
| U.S. Chief Economist: | Beth Ann Bovino, New York + 1 (212) 438 1652; bethann.bovino@spglobal.com |
| U.S. Senior Economist: | Satyam Panday, New York + 1 (212) 438 6009; satyam.panday@spglobal.com |
| Research Contributors: | Shruti Galwankar, CRISIL Global Analytical Center, an S&P affiliate, Mumbai |
| Debabrata Das, CRISIL Global Analytical Center, an S&P Global Ratings affiliate, Mumbai | |
| Arun Sudi, CRISIL Global Analytical Center, an S&P affiliate, Mumbai |
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