It's looking much less likely the U.S. will experience a sharp, V-shaped recovery. Instead, a growing amount of data is indicating a slower, "swoosh" shaped recovery is likely.
The swoosh refers to the shape of Nike's logo and indicates a recession that starts with a steep decline and is followed by a gradual recovery.
According to the Wall Street Journal's Economic Forecasting Survey, 70% of economists think the recovery will be swoosh shaped.
The reason is the continued outbreaks of COVID-19, which is leading to less economic activity.
The Opportunity Insights chart below (click to enlarge) shows an estimate of the percent change of total U.S. consumer spending.
You can easily recognize the famous Nike swoosh in the chart.
You can also easily see that consumer spending stalled in mid-June and is running at about 6.4% below pre-COVID levels. While much better than earlier this year, this is in a range that indicates we're still in a deep recession.
Other data also supports a swoosh shaped recovery.
The chart below is from Oxford Economic's U.S. recovery tracker. The tracker looks at 6 economic sectors to develop an overall economic score.
It again illustrates the swoosh. But more ominously it also shows the U.S. economy has declined a bit over the past month. Key quote:
"The foundations to this recovery are cracking under the weight of a mismanaged health crisis. Our Recovery Tracker fell for the third time in five weeks in the week ended July 10. The health index declined for the fourth consecutive week; demand fell for the second consecutive week, its largest decline in four months; and employment was unchanged."
Other data also points to a slower recovery, especially unemployment claims which have averaged well over 1 million a week over the past 4 weeks and rose last week over the prior couple of weeks.
The resurgence of COVID-19 likely means a full economy recovery won't happen until a vaccine is available and - and this is a big and - widely distributed. This combination will likely not happen until at least Q2 of next year, and it could easily take longer.
We, of course, hope the economy recovers quickly. But businesses of all kinds need to be prepared for the recession lasting well into next year.
from Small Business Labs https://ift.tt/3fnFcgD
via https://ifttt.com/ IFTTT
No comments:
Post a Comment