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COVID-19 ISO Insights

Pandemic Economic Indicators: 2021 EOY Update

January 4, 2022

By Christopher Sirota, CPCU

Key Takeaway: Various economic indicators reportedly reveal a trend towards recovery from pandemic impacts.

Back in January 2021, we posted about some economic forecasting reported on by the NPR podcast The Indicator, based in part on three economic indicators related to how the U.S. economy might fair in 2021. Now, a follow-up podcast (full transcript here) takes a look a more recent data to assess the current status of those indicators.

The Indicator asked the following three economic questions:

How might we evaluate if the government's recent economic stimulus is helping people?

Per the podcast, one way to evaluate might be to examine the survey the U.S. Census Bureau has been reportedly conducting which asks U.S. households if they have had enough food in the previous week (see the U.S. Household Pulse Survey data tool here). Regarding hunger we noted that the weekly Pulse Survey previously showed that about 27 million people reported that they did not have enough food to eat in the previous week. Now, per the follow-up podcast, the number has dropped to 20 million people. That said, the podcast adds that there was a related annual survey conducted by the Department of Agriculture-- that is reportedly considered by experts to be more accurate than the Pulse Survey-- which actually indicated that the severity of hunger in 2020 was not as high as initially thought, thus likely indicating that the so-called "social safety net" is working.

How might we evaluate if the economic damage caused by the pandemic has ended?

To answer this question, The Indicator podcast suggested monitoring the data for spending on services, which includes "doctor's appointments to eating in restaurants to staying in hotels to getting a haircut to attending a concert." The podcast explains that such services have been typically the hardest hit by the pandemic, so increases in spending might indicate the economy was on the mend. The January 2021 podcast explained that consumer spending for people-related services in 2020 was seven percent less than pre-pandemic levels; according to the follow-up podcast, more recent 2021 data shows that spending is still down, but only by one percent. The Indicator notes, however, that spending on goods has skyrocketed by 17 percent in comparison over the similar time period. (See the Bureau of Economic Analysis home page here).

How might we evaluate if the pandemic has caused potentially permanent or very long-lasting damage to the economy?

The January 2021 podcast suggested monitoring the Architecture Billings Index (see The American Institute of Architects web page for the index here). Why? Per the podcast, the index helps to understand the demand for architects and their firms. If the demand is low, then, according to the podcast, that typically means that the number of new office buildings and stores being constructed will be low as well. Per the January 2021 podcast, the index showed a drop in demand for eleven months in a row during the pandemic, but since February 2021, demand has been increasing over the last nine months. This reportedly reveals a growth in commercial real estate construction, which likely suggests a trend of returning to in-person office work.

How does the U.S. recovery compare with other countries?

The Brookings Institute has compared the U.S. economic recovery with other G7 countries.

The Institute explains that by the third quarter of 2021 U.S. GDP had surpassed its pre-COVID level, in part because of the U.S. fiscal stimulus which was relatively large compared to other countries, and a general shift in demand for goods rather than services.

For comparison, per the article, the following several countries in Europe have had a smaller exposure to service sector impacts and have rebounded to their pre-COVID GDP levels: Austria, Belgium, Finland, Netherlands, Norway, Sweden, and Switzerland. The article adds that several countries in Asia have also rebounded, especially Taiwan, likely due to its manufacturing industry.

Although many countries including the U.S. seem to be recovering, the article highlights that when analyzed from the point of view of pre-COVID economic trends, none of the activity in the G7 countries have returned; the article explains projections as follows:

[…] the U.S. is expected to reach its pre-COVID trend in the fourth quarter of 2021, with most other countries doing so in 2022. However, a fourth wave of infections and the emergence of the new omicron variant have increased uncertainty about the speed of recovery, especially during the winter months in the Northern Hemisphere.

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