On Saturday I (Nick) took my 92-year-old mother on a drive around Manhattan so she could see how quiet the city is just now. Her doctor said it was ok as long as we both wore masks and agreed it would be good for her to get out of the apartment for a while.
She was amazed by the sight of an empty city and after a few hours of digesting what she had seen she relayed this story to me:
- While in Europe at the end of her college studies she went to Cologne, hoping to see the famous cathedral there. This was either in 1949 or 1950.
- The city was still suffering from the aftereffects of the famous Allied bombing campaign in World War II.
- There was no building taller than 1 story anywhere in Cologne save one: a small 3-story hotel that had escaped the bombing.
- The city lit up that one surviving building with spotlights every night to remind its residents that they too were survivors and give them hope about eventually rebuilding their lives.
“New York needs this kind of symbol – something to give us hope. Otherwise many people will just leave” was her summary. She, like I, will never leave New York but her comparison to Cologne was striking. Especially since she’s seen her share of bad situations, growing up in a third world country (Cuba) during the Great Depression, then the revolution there and coming to America with no money or native language skills…
While New York most certainly does not have such a symbol at present, traffic data from other cities around the world continues to serve as something of a heartening message. We look at these data points every Sunday night, courtesy of TomTom GPS analysis.
First, let’s look at the traffic congestion data for New York City itself over the last week as a baseline. The thick red line is this week, the dotted red line is last week, and the blue line is the 2019 average:
This data shows:
- My drive with mom at 10am on Saturday was representative of a traffic-free city. Actual congestion was 4%, the prior week was 2%, and the 2019 average was 24%.
- But, and I can confirm this personally, traffic volumes are picking up modestly by the day. I put that down to less use of mass transit for commuting.
- Even still, the peak of that chart (Friday at 4pm) shows 22% congestion versus a 2019 average of 76%.
Now let’s look at Berlin through the same lens and timeframe (the last week), since Germany has been reopening safely for a few weeks thanks to extensive testing resources and broad social acceptance of physical distancing:
Berlin’s data tells a really good story:
- Weekday traffic is largely back to normal. The morning commute still looks light, presumably because of work-from-home.
- Midday traffic is entirely normal, which shows that retail stores and restaurants are taking deliveries again.
- This weekend’s traffic was largely normal, indicating consumers feel comfortable taking discretionary shopping trips.
Next, here is Paris, which is 2-3 weeks behind Berlin in its reopening:
What we see in that chart:
- A noticeable improvement in traffic volumes this past week (solid red line) versus the week before (dotted red line)
- At the peak (Friday afternoon) Parisian traffic was essentially half of normal (36% congested vs. 77%).
- This past weekend also saw higher traffic densities, showing that discretionary trips are increasing.
Finally, let’s look at the first large US city to reopen (Atlanta) and the largest so far (Houston), although they are on slightly different schedules since Georgia preceded Texas. These are the 2 most important natural experiments to consider when evaluating the cadence of America’s economic restart.
First, here is Atlanta’s traffic congestion over the last week:
And this is Houston’s traffic over the last week:
The lessons here:
- With the exception of Friday afternoon in Houston, the traffic data shows that US reopenings are proceeding, but slowly.
- This weekend’s traffic looks very much like last weekend, showing that there is not much of a change in discretionary travel.
- Contrary to popular perceptions and social media attention-grabbing anecdotal evidence, reopenings in Georgia and Texas have proceeded slowly. That’s a good thing when it comes to containing a large second COVID outbreak. Remember: to congregate en masse in Houston or Atlanta, you pretty much have to first get in a car and drive.
The bottom line to all this: as much as we all would like the US economy to snap back quickly and give us a brightly lit beacon of hope, the data so far says it will be a slower and more deliberate rise in activity. To the degree that makes it a safer restart, that’s a positive development for capital markets. Slow but repeatable growth is much better for asset prices than a false start.