Head of U.S. Economics
BofA Global Research
On the Mend
The U.S. is on the mend, with a significant slowdown in the number of daily cases of the coronavirus in the past week. Although we still have a long way to go before we can say the spread of the virus is under control, the signs are encouraging, which should help to underpin greater economic activity.
In the last week we’ve seen the average daily number of new virus cases drop to around 54,000 compared with the July 22 peak of more than 67,000,1 and 39 states are now reporting a drop in case numbers, versus 24 a week ago.
In spite of improvement, the four hot zones – Texas, Florida, California and Georgia – still have work to do. They account for over 45% of all cases, with the positive ratio of tests in those states as high a 20.4%. To get an idea of how far we still need to go, The World Health Organization’s recommended threshold is 5%.
What does this mean for the economy?
So far, the economic recovery continues to go sideways, with trends in small business reopening and hiring rates still stalled. Indeed, Homebase’s measure for small business reopening and employment has actually dropped slightly in the past week.
Consumer spending appears to have slowed down in July, relative to June, and people’s mobility, tracked by the Dallas Federal Reserve, dropped to -45% in the week ending August 1 – its lowest reading since mid-June.
People are also as reticent as ever to travel by air, with air passenger levels still down about 72% from a year ago. One bright spot is dining, which increased for the fourth consecutive week, according to OpenTable.
As for jobs, we saw a modest rise in job postings in the past week, but shift work growth was slowing in early August, according to time punch data from employment agency Kronos. And the number of people losing full time jobs is still over 1 million a week.
Yet it appears we are at a turning point for the virus – at least for this most recent wave. If positive trends on slowing virus cases continues, we expect growth in economic activity to accelerate.
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- Based on a 7-day moving average.
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