Head of U.S. Economics
BofA Global Research
Better virus data but services still lagging
The virus picture improved again this week, as COVID cases continued on a downward trend. The 7-day moving average of cases is down 18.2% from the peak on August 1st. 1 Declining cases in the South, which drove the summer surge, have offset steady increases in the Midwest and Northeast.1 Encouragingly, new hospital admissions and hospitalizations are also falling significantly, but even so, hospital systems remain under pressure in many areas of the country.1
School reopening and the start of the school year remain a risk for the COVID outlook. Still, even at the peak on September 7th, hospitalized pediatric patients (a proxy for child and teenage patients) accounted for just 1.8% of total hospitalizations.2 This suggests the risk of serious infections for younger age groups still remains relatively low, though kids and teenagers may still contribute to the spread of the virus.
Activity data point to modest improvement with workers returning to the office, but the Delta variant continues to weigh on services. Mobility data from Google suggest that more people returned to the office after Labor Day, as visits to workplaces recovered and were up relative to the end of August.3 Meanwhile, both seated diners and air traffic increased during the week ending September 20th but remain below 2019 levels, as the Delta variant and other factors continue to weigh on consumers' engagement with certain leisure activities.4,5
High frequency data from Homebase and UKG (Ultimate Kronos Group) suggest that the September jobs report may again be on the softer side. The Homebase employees' working index fell by 4.9% between the September and August payroll survey weeks.6 This is likely to be revised up over the coming weeks by 1-2%, and some of the decline may be seasonal. But the bottom line is the data does not suggest there was an acceleration in hiring activity. Similarly, the UKG time punch mid-month data fell by 0.1% in September.7 It's likely that Delta held back hiring activity again in September.
The U.S. still remains well below herd immunity, and therefore, risks from the virus still remain a concern. If the virus situation improves further, we would expect economic data to improve as well in the weeks ahead.
The Economics of Reopening will return on October 6th.
- CDC, HHS
- Google LLC “Google COVID-19 Community Mobility Reports,” data through September 16, 2021
- OpenTable, Haver Analytics, Data through September 20, 2021
- TSA Data through September 20, 2021
- Homebase, Data through September 19, 2021
- Ultimate Kronos Group