Economic Blog Posted by lplresearch
1/22/21
It has been exactly one year since the first COVID-19 case in the United States was reported to the Centers for Disease Control (CDC), and to say the world as we know it has been completely changed would be an understatement. Thankfully, we may finally be seeing the light at the end of the tunnel.
With the rollout of multiple approved vaccines underway, some real-time COVID-19 indicators and mobility-related data points have put in their final highs (or lows). As shown in the LPL chart of the day, restrictions implemented at the end of 2020 appear to be helping to curb the spread of the virus, as new COVID-19 cases and those currently hospitalized have been on the decline.
Meanwhile, the positive rate has also declined despite daily tests near all-time highs.
However, while COVID-19 data has been improving, real-time economic indicators like OpenTable reservations show businesses continue to struggle as restrictions on activities to curb the late-2020 surge remain in place.
Similarly, the number of people getting on airlines has fallen back to mid-October levels after the holiday bump. Domestic air travel activity remains 64% below pre-pandemic levels.
“The good news is that cases are declining and vaccine distribution is increasing, but service industries and air travel are clearly still under a lot of pressure,” said LPL Research Chief Market Strategist Ryan Detrick. “While manufacturing and housing data remain firm, recent data on the job market and consumer spending have been choppy.”
It’s very encouraging to see COVID-19 cases and hospitalizations improving, a trend we hope will continue until this pandemic ends for good. In the meantime, we will continue to follow high-frequency data to gauge the recovery’s progress. The next report card comes next week with the release of fourth quarter 2020 gross domestic product (GDP).
We’ll also be closely watching developments in Washington, DC. The economy’s bridge to the other side will likely get stronger in the coming weeks with more stimulus—potentially to the tune of another $700 billion to $1 trillion.
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