• Extreme pricing pressure, worsened by the Russia-Ukraine conflict, continues to weigh on the U.S. economy, but signs of an omicron retreat have provided some relief.
• With improving public health conditions, our measures for U.S. mobility and social activities have risen. Google community trends, seated diners, air traffic, and hotel occupancy rebounded sharply through early April from their January lows.
• Prices for raw materials, energy, and seaborne transportation remain elevated, mainly owing to the Russia-Ukraine conflict and long-lasting global supply chain disruptions. Gas prices--at $4.17 per gallon for the April 4 week--are just under the all-time high.

Virus and mobility

COVID-19 cases:  As of April 5, new cases are now almost 97% below the Jan. 15 peak and the lowest since July 2021. The number of deaths also declined by almost 80% from its Feb. 1 peak and is at its lowest since August 2021 (see chart 1). In the past two months, the vaccination rate (both fully vaccinated and vaccinated with at least one dose) increased by just 1%. Currently, almost 65% of the population is fully vaccinated and 77% has received at least one dose.

Mobility:  As of April 2, mobility across the U.S. in the Google community trends retail and recreation subindex remained 10% below the pre-COVID-19 levels, with state readings mixed. Once facing milder restrictions than other countries, the U.S. as of April 1 has become relatively more stringent than all but three other countries, with the U.S. stringency index at 58.8 (100 is the strictest).

People-facing COVID-19-sensitive

OpenTable:  Seated diners at restaurants nationally, as of April 3, are just 1.4% below pre-pandemic levels as a number of the states lifted capacity constraints and mask mandates (see chart 4). Nevertheless, states like New York and Illinois are operating almost 34% and 20% below their pre-pandemic levels, respectively. Florida and Texas are 20% and 27.5% above their pre-pandemic levels, respectively.

Air traffic:  Travelers passing through the TSA checkpoints at the airports are just 10% below the pre-pandemic level, almost four percentage points above a month ago (see chart 5). Business travel recovery continued to lag recovery in leisure travel segment, weighing on the overall industry.

Hotel occupancy:  The occupancy rate for the week ended March 19 surpassed its 2019 average of 66.1 for the first time since August 2021, reaching 66.9% for the week (see chart 6). For the week ended March 26, the occupancy rate inched 1.4 percentage points lower to 65.5%, though just under its pre-COVID (2019) norm.

Current and future activity

Weekly Economic Index (WEI):  The WEI came in at 4.8% year over year for the week ended April 7, mainly because of a rise in retail sales, railroad traffic, electricity output, and fuel sales (see chart 7). The WEI for March 26 was 4.6%, just over our year-over-year GDP reading through first-quarter 2022. It has trended lower since May 2021, but this follows GDP recovering to a 37-year high in 2021. Moreover, economic activity remains elevated compared with the pre-pandemic level, with growth this year reaching 3.2%, well above potential trend growth.

Home mortgage applications:  The mortgage purchase applications index fell by 9 points to 258 for the week ended April 1, mainly owing to rising mortgage rates (see chart 8). For the week ended March 31, the 30-year mortgage rate was at 4.7%, its highest level since December 2018. The housing market is expected to cool further as rates increase throughout the year.

Johnson Redbook Same-Store Sales Index:  For the week ended April 2, the same-store sales index increased by 13.1% on a year-over-year basis (four-week moving average), showing a slight uptick in sales momentum amid increasing price pressures, signaling people are buying fewer items purchased at higher prices than before (see chart 9).

Consumer confidence:  University of Michigan consumer sentiment plunged to an 11-year low of 59.4 in the final March reading (see chart 11). The current and expectations indices fell to 13-year and 10-year lows, respectively. The Conference Board consumer confidence survey rose to 107.2 from a 12-month low of 105.7 in February, supported by its job strength index, which hit an all-time high. The Ipsos-Forbes Advisor biweekly consumer confidence index climbed by 1.9 points over the last two weeks to 55.4 on April 7, remaining below its 62.4 high in June (see chart 12). Inflation expectation readings are still remarkably high across all confidence measures as consumers expect high prices will continue to squeeze purchasing power.

Taiwan Purchasing Managers' Index (PMI) measures:  The Taiwan manufacturing PMI stabilized at 57.8--now in expansion territory for 21 straight months but below its April 2021 peak on continued supply chain shortages (see chart 13). Readings were mixed, with the new orders subindex down by 6.2 percentage points to 52.4, while the backlog orders and supplier deliveries subindices saw gains, signaling bottlenecks still have not eased.

U.S. Purchasing Managers' Index (PMI) measures:  The manufacturing PMI and services PMI both were well in expansion territory for March. The services PMI increased by almost 1.8 points from the prior month to 58.3--recording the fastest expansion in the past four months. Manufacturing PMI fell by 1.5 percentage points to 57.1, below market expectations of 59 (see chart 14). In both surveys, price subindices climbed to near-record highs in March as the Russia-Ukraine conflict worsens already extreme bottlenecks.

Raw steel capacity:  Raw steel capacity utilization remained slightly below the 2019 average for the seventh consecutive week, after staying above the precrisis level since May 2021 (see chart 15). As of April 2, capacity utilization was at 79.3%, which was steady compared to the previous week and 1.4 percentage points below the 2019 average.

Prices

Lumber futures:  As demand for homes cooled and bottlenecks from the Canadian floods eased, lumber futures prices dropped sharply in March to $938 per 1,000 board feet on April 5 (see chart 16) and are 44% below the all-time high on May 2021 ($1,686 per 1,000 board feet).

CBR-BLS Metal Price Index:  With commodities in short supply, aggravated by the Russia-Ukraine conflict, the metal price index reached a record high of $1,431 per point, a 130% increase from its recent lowest value recorded during April 2020 (see chart 17).

Freightos Baltic Global Index:  The Freightos Baltic Global index, at $9,291 per point on April 5, while almost 14% below its peak in late October 2021, remains almost 575% above its 2019 average on lack of container availability (see chart 19). The lack of containers has a ripple effect down entire supply chains, disrupting trade globally.

Gasoline prices:  For the week ended April 4, gasoline was $4.17 per gallon, just under its all-time high of $4.32 per gallon recorded for the week ended March 14 (see chart 20). Strong post-pandemic demand across the world amid weak reduced output from major oil-producing nations and sanctions on Russia (a major oil exporter) have pushed prices higher.

Forward inflation expectations:  Five-year and 10-year long-term inflation expectations climbed higher in March to 2.32% and 2.80%, respectively, as of April 4 (see chart 21). The 10-year forward rate remains near its all-time high of 2.95% reached on March 28. The five-year forward is holding around rates not seen since November 2014.

Labor market

Initial jobless claims versus Indeed job postings:  Initial jobless claims dropped by 5,000 to 166,000 for the week ended April 1, back to their lowest level since November 1969. Indeed job postings as of April 1 were 58% above the Feb. 1, 2020, level (see chart 22). Job postings are 5.5 percentage points below their all-time high of 63.5% recorded on Dec. 31, 2021, suggesting that some job postings have being filled.