With the Fed increasingly using high frequency data to assess the state of the US economy in real time, today we have an update heading into Q4. Now that Summer travel and festivities are over, here’s how two non-traditional datasets published by regional Feds look as we transition into fall:
#1: The Dallas Fed Mobility and Engagement Index for the US as a whole. This indicator uses data from SafeGraph to track how often, long and far cell phone users venture away from home. We used a 5-day rolling average back to the start of this year as a baseline (pre-lockdowns):
- The latest 5-day rolling average reading of -44.43 was as of last Saturday. That’s down from the post-COVID high of -27.86 on 9/6, one day before Labor Day as Americans traveled and got ready for the holiday.
- This reading was +1.53 a week before lockdowns on 3/9, even with March typically being a light month for travel. That compares to the best reading this year of +10.56 on 1/31 pre-COVID and the worst reading of -110.21 on 4/10 post-COVID.
Takeaway: activity plunged under lockdown, climbed back to a little over half-way pre-pandemic levels during May and June, retreated again in August amid virus flare ups, but reached its highest level since lockdowns over Labor Day weekend. Nevertheless, activity has since dropped off back to levels last seen during the slump in August.
#2: The New York Fed’s Weekly Economic Index. This aggregates daily and weekly data on unemployment insurance claims, Federal tax receipts, retail sales, consumer confidence and gasoline sales, etc.:
- The latest reading is -5.11 as of today compared to -5.07 on 9/5 over Labor Day weekend and -4.81 on 8/29 the weekend before the holiday.
- This index was +1.42% on 3/7 pre-COVID and dropped to its worst reading of -11.45 on 4/25 post-lockdowns.
Takeaway: activity for this indicator is also about half-way back to where it was in early March before lockdowns, but is also trending lower post-Summer events.
Bottom line: the lull in activity post-Summer festivities is not surprising as parents and kids stay close to home while they transition back to school and work. That said, fewer trips out to restaurants/stores/other destinations will weigh on the already beaten down service economy this fall. Depending on the trajectory of the virus, many Americans will also likely opt for spending the holidays at home or with close family and friends nearby. The uncertainty over another DC fiscal stimulus package is another factor, and passage of another CARES Act could help consumer spending this fall.
These crosscurrents will converge, for good or for bad, during this year’s holiday shopping season. Even if online sales prove strong as consumers shift to more digital rather than physical shopping for safety and convenience reasons amid the pandemic, retailers will want to see more foot traffic in stores to allow for more impulse purchases. Of course, they’ll run deals to encourage that consumer behavior, but 2020 will likely end up as a mostly e-commerce centric Holiday season. That’s a continued boon for “Big Tech/Retailers”, such as Amazon and Walmart, but an ongoing difficulty for small businesses and the service sector economy.