We check in again today on some of the real-time economic data that LPL Research is monitoring to provide insight into how the latest increase in COVID-19 cases and the rollback of certain reopening measures are affecting the state of the US economy, as traditional monthly and quarterly economic data are too slow to pick up the changes that are occurring.
The high-frequency data that we monitor is now showing a pause, slowing, or even a modest reversal in the recovery. This comes as some states rollback reopening, and Americans make changes to their behavior, in response to an increase in the number of new COVID-19 cases. The COVID-19 tracking project reported 62,879 new cases in the United States on Tuesday, July 14, which is down from the record high of over 66,645 on July 10, but still up 21% week over week. As shown in the accompanying chart, while more testing can account for some of the increase, more tests are also returning positive results. The 7-day average positive test rate has risen to almost 9%, well above the World Health Organization’s recommended positive test rate of 5% and regressing to levels last seen in early May.
The 7-day average of COVID-19 related hospitalizations has increased by almost 80% since its recent low on June 20, with the 7-day average number of new cases rising by 144% during the same period. As shown in the chart below, looking at the peaks that occurred in April, the number of patients hospitalized didn’t start to decline until about 10 days after the number of new cases peaked. If this pattern repeats, then based on the recent increase in new cases, hospitalizations may reach record levels in the coming weeks. At the same time, new cases have been skewing younger, slowing the trajectory.
Given these recent increases in US COVID-19 cases and hospitalizations, it’s unsurprising that the recovery in many of the real-time indicators appears to have stalled recently. The number of diners in US restaurants, down 63% year over year from a recent high down 59% year over year on June 27, looks to have been particularly hard hit as states such as California have limited indoor dining (source: OpenTable).
Electricity demand has also fallen from its recent peak in mid-June, indicating a slowdown in the rate at which businesses are reopening or softening demand for their goods and services, although it did pick up slightly in the past week.
One real-time indicator that recently exceeded pre-pandemic levels was map routing requests by the Apple Maps app, with more requests indicating driving is occurring. This measure has leveled out, which could reflect people leaving home less frequently for non-essential tasks, offset by a substitution effect as people drive more rather than fly or use public transit.
Worries over the increasing scale of the latest COVID-19 outbreak also now appear to be taking a toll on consumer confidence. The Bloomberg Weekly Consumer Comfort Index fell for the first time in eight weeks.
“Most of the real-time data is now showing pause in the recovery as the US struggles to control the latest COVID-19 outbreak,” explained LPL Financial Equity Strategist Jeffrey Buchbinder. “This data is somewhat at odds with the optimistic economic recovery scenario reflected in stocks and supports our view that the economic comeback may take longer than some anticipate.”