Industrial Cities COVID Recovery: US, Germany, China

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Industrial Cities COVID Recovery: US, Germany, China

Today we will take a look at the progress of several of the world’s preeminent industrial cities as they recover from COVID-related shutdowns. As usual, we will use crowdsourced TomTom GPS traffic congestion data, but in a different graphical form from what we’ve shown you before. This alternative presentation gives us a cleaner comparison between pre- and post-COVID activity.

Let’s start with Shanghai, which as well as being China’s financial center is still a major industrial hub. Some details:

  • The chart below is broken down into 2 components, each linked to a week of the year 2020 (week 1 is December 30, 2019 to January 5, 2020, for example). The greyed-out weeks were periods of heavy COVID restrictions (7-12 for Shanghai) and the boxed in weeks had more modest restrictions (13-19 here).
  • The bubble chart at the top shows how busy that day’s traffic congestion was (Friday of Week 2 was the heaviest, for example). We assume that high levels of traffic equate to stronger economic activity.
  • The line chart below shows average congestion by week. Shanghai’s peak was Week 2 (41%).

The bottom line on Shanghai’s post-COVID recovery: on the plus side, it is back to 77% of normal congestion (26% now versus 34% average for weeks 1-3) but on the downside it has flattened out in the last month.

Now let’s look at Stuttgart, home to firms like Daimler and Porsche as well as many German mid-sized manufacturing companies. Same data presentation here: dots above show daily congestion, line chart below shows the weekly progression:

The bottom line on Stuttgart: weekday traffic, which we associate with industrial activity, is actually higher than the month before COVID lockdowns went into place – an impressive recovery.

Next, let’s look at Sao Paolo, Brazil’s largest manufacturing hub. The country is still struggling with COVID-19, so the weekly timeline is still boxed off through week 30 (ending July 26):

The bottom line on Sao Paolo: traffic congestion is running at 50% of pre-COVID levels (17% now, 34% at the start of 2020), but improving very modestly week by week.

For a representative US manufacturing city, we went with Detroit. There are obviously others, but in reviewing their traffic data they all looked pretty much like the Motor City.

The bottom line on Detroit: its congestion is running at 50% of pre-COVID levels (8% now, 16% in weeks 2-10), pretty much the same as Sao Paolo and far behind Shanghai and Stuttgart.

Pulling all this together:

  • The data here mirrors both our prior cross-border comparisons and the high frequency data Jessica outlined last week. The US economy is simply not recovering as quickly as either northern Europe or China and has stalled out in recent weeks.
  • The reason is simple enough: the US is experiencing an elongated COVID-19 economic impact relative to other parts of the world. Some regions, such as the Northeast, are faring better but large swaths of the country are seeing stop-start reopenings. The net effect is an American economy stuck somewhere between first and second gear, with the gears grinding as the driver tries to upshift.

Summing up: markets are assuming this herky-jerky economy is temporary because 1) there will be further Federal fiscal stimulus soon and 2) the country will eventually adapt to behaviors that will slow the spread of the virus to manageable levels until a vaccine is ready. In our view both are reasonable assumptions. But just imagine where the S&P would be if Detroit’s traffic congestion chart looked more like Stuttgart than Sao Paolo’s…


TomTom Traffic Congestion Data: