The decisions made in May to reopen parts of the country without proper safety protocols have brought about a resurgence in COVID-19 cases that has already swept through more than 40 states with no signs of stopping and now has the U.S. economy stalling.
Restaurant reservations, public transit ridership and mobility data, among other alternative data, all point to a slowing economy.
The evidence of this slowdown has been apparent for some time now, but to see it requires a look at alternative data like restaurant reservations, public transit ridership and mobility data.
It’s an example of the nontraditional ways that close observers of the economy can glean insight into growth trends before they show up in traditional data like gross domestic product and the monthly employment report.
A surge in cases
Behind the slowdown is a resurgence of the first wave in COVID-19 that began in mid-June and has resulted in the doubling of daily case counts in recent weeks across the U.S. compared to the counts during the initial wave in mid-April.
The volume of cases is being driven by the near-debilitating outbreaks in economically important states such as Florida, California and Texas. Florida, for example, had been averaging nearly 12,000 cases per day earlier in July, exceeding New York’s peak case count in April of 10,000 cases per day.
Economic recovery at risk
In our estimation, absolute economic recovery rests on the eradication of COVID-19. Yet in the absence of a vaccine, slowing the spread through continued social distancing and the use of personal protective equipment such as face masks is the only reasonable and practical alternative to promote economic recovery.
This data suggests that the economy began to slow on or around June 24.
The alternative to these protocols – as we’ve seen recently – is more shutdowns.
The story of the stall is being evidenced through a series of alternative and near real-time data showing that the economy began to slow on or around June 24.
A clear sign of the stalling economic recovery manifested itself through first-time jobless claims, which increased by 1.416 million for the week ending July 18. This represents the first increase in initial unemployment claims since the week ended March 28, when initial unemployment claims topped 6.8 million.
Make no mistake, this should clearly affirm the evolution of that data in this recession and point to increasing risks around a slower pace of workers being recalled to their pre-pandemic jobs.
But for those who are more open to alternative forms of data, the headline surrounding jobless claims has been weeks in the making.
Looking at varying forms of alternative data, the resulting readings have been pointing to a slowdown in economic activity brought about by the resurgence of COVID-19 cases and the resulting reaction from political authorities and well-minded consumers.
Credit card data
As earnings season continues, an emerging form of alternative data shedding light on the recovery is credit card data provided by various issuers around the country. According to earnings releases for the second quarter, both Chase and Discovery pointed to a strong rebound in credit card activity in the middle of the second quarter, but as the quarter closed out the level of activity began to flatten, pointing to an increase in uncertainty by those using their cards.
Apple mobility trends
One of the most telling datasets that point to an economic stall is the mobility data tracked by Apple that has shown a flattening of people using the iPhone for directions. Whether an indication of people returning to a “safer-at-home” state by their own choice or a shutdown of businesses, this clearly begins to paint the picture of changing consumer behavior.
OpenTable reservation data
The same dynamic is seen in restaurant reservation data that began to flatten in mid-June as the resurgence spread. Most notably as the trend for the U.S. began to flatten, those reservations in states hardest hit by the alarming increase in case counts saw declines in reservations — a strong signal that a lack of measures taken to flatten the spread of COVID-19 upon reopening have ultimately not been enough.
TSA checkpoint data
As restaurant reservations have shown negative effects of increasing case counts, so too has the traffic through Transportation Security Administration checkpoints in our country’s airports. The hopes that Americans had in May as reopenings began are clearly being set back by the waves of resurgence happening around the country, especially in some of the most popular vacation destinations.
We believe that significant air travel points not only to a willing-to-spend consumer but also to a back-to-normal corporate traveler, which in turn leads us to view this is as an ostensibly strong alternative economic indicator. But recent TSA data casts doubt about the pace of a future recovery.
Public transit demand
Lastly, changes in the use of public transportation show how employees in the real economy began to return to work as the economy reopened and economic stimulus measures took hold. But as populous parts of the country take steps back in reopening or move to shut down businesses, the data shows that those people affected are being relegated back to home, or even worse, the unemployment office.
The real economic need comes next
As the fiscal cliffs loom large over our economic recovery while the pandemic resurgence spreads across the country, the ability of fiscal authorities to pass a comprehensive round of stimulus to support not only those affected individuals – but also those affected businesses – will represent the most critical moment in time that generations of Americans have seen.
As we look to continue to push and pull our economy up from the depths of this unprecedented recession, this is not a time to blink or lose focus. Not only does the economic recovery depend on it, but the health and well-being of Americans do as well.
For more information on how the coronavirus is affecting midsize businesses, please visit the RSM Coronavirus Resource Center.
