E Economics

U.S. High Frequency Data Suggest That Economic Recovery Has Stalled Amid Virus Resurgence

08 July, 2020

The coronavirus pandemic is still hitting the U.S. Although various databases offer differing daily U.S. case counts, they tell the same story overall namely that cases skyrocketed after states reopened. Business Insider highlighted that “America’s seven-day rolling average of new coronavirus cases per day has skyrocketed since mid-June.” It added that “The US has broken records for daily coronavirus case counts five times in the last 12 days.



In this context, the WSJ underlined that “The new economic disruptions are concentrated in the three most populous states—California, Texas and Florida—and Arizona, all of which have seen a rise in infections in recent weeks. Together, those states make up about 30% of all U.S. economic output, according to Moody’s Analytics.” It also pointed out that small businesses have regained about half of jobs lost during the crisis from mid-April to late June. Yet, in the last week of June, the gains stopped and started to reverse in early July.



Other high frequencies data suggest that the economic recovery has stalled recently. CNBC reported (citing ShopperTrak data) that retail traffic declines accelerated in the past two weeks. The article noted that “The week ended June 27 traffic in the U.S. was down 35.7%, according to ShopperTrak. Last week it was down 39.5% compared with the prior year.



In the meantime, QSR underlined (citing the NPD Group) that the recovery of U.S. restaurant customer transactions has been on hold for the second week in a row. “For the week ending June 28, total customer transactions at major U.S. restaurant chains are down 14 percent versus the same week a year ago.” For the week ending June 21, “total transactions were down 13 percent versus year ago.” These results have been recently confirmed by Opentable data. Furthermore, Shake Shack provided a business update and revealed that comp sales declines did not improve between May and June, remaining at -42% YoY.



Last week, CBS also released a very interesting article showing that consumers kept avoiding stores and restaurants. Cell phone data showed that “traffic at retail and food establishments ticked upward for most of April and May as businesses reopened, …, but it has started to drop again since mid-June, marking one of the first periods of deceleration since city and state lockdowns began.”



Looking at transportation, the WSJ reported that United Airlines expect reservations for travel within the coming months to quickly begin to slide after states including New York, New Jersey, and Connecticut said they would require people arrive from hot-spot states to quarantine for 14 days.



Finally, these observations look coherent with Fed’s Bostic latest comments. In an interview with the Financial Times, Raphael Bostic, the president of the Federal Reserve Bank of Atlanta, whose district covers some of the regions hardest hit by the current outbreaks, including Florida, said “high-frequency data had shown a “levelling off” of economic activity both in terms of business openings and mobility.”