Research report

Measuring the recovery: Pressing pause

COVID-19’s resurgence in the U.S. has paused the nascent economic recovery. We dive into traditional and high frequency data to show how the pandemic is impacting economic activity and equity market performance.

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July 28, 2020 | 8 minute read

In mid-June, we laid out the high frequency metrics we’re watching in “Measuring the economy: Reopen for business.” At that time, cases of COVID-19 in the U.S. were near a 10-week nadir, most states had reopened to some degree, and there was optimism that the recovery was gaining momentum. Traditional data – released with a significant lag – reinforced this optimism as the monthly employment and retail sales data showed a hefty bounce in May and June.

Since then, however, the pandemic has taken an alarming turn. The total number of new cases has risen sharply, often in areas that led reopening or never mandated any shelter-in-place restrictions. This has served as a painful reminder that at its core, our country is experiencing a health crisis. High frequency indicators show that in July the economic recovery looks to have stalled, and that rising cases have had a material impact on activity. This loss of momentum is doubly concerning as key fiscal supports will soon fade, which could amplify the challenges our economy faces.

Key takeaways
  • The rebound in traditional indicators fueled initial hope for a V-shape recovery.
  • High frequency indicators imply that the uptick in COVID-19 cases in the U.S. has stunted improvement in activity.
  • Government stimulus is set to end, making high frequency indicators even more critical.
  • Relative equity market performance continues to be swayed by the path of the pandemic.

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Lara Rhame

Chief U.S. Economist + Managing Director

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