The National Bureau of Economic Research officially announced in early June that the United States is in a state of complete stagnation, as unemployment has risen to historical levels, total production has decreased and industrial activity has slowed, and in this way the Coffid pandemic ended the 19th longest period of expansion in US history.
In a report published by the American Five Thirty Eight website, writer Neil Payne said that the signs of recovery have been confusingly mixed since then. Unemployment has improved faster than expected, and the stock market has shown surprising resilience, but other indicators have looked much worse. So how do you know when the economy is really recovering?
In the survey, conducted in partnership with the Global Markets Initiative at The University of Chicago Booth School of Business, experts were asked what measures they were tracking to judge the strength of the recovery now, and what they were relying on to forecast economic trends afterwards.
Recovery metrics
To measure the recovery, economists are closely studying GDP. In this regard, 81% of those surveyed said that they were closely following GDP, while 16% said they viewed the GDP somewhat closely, and only 3% said they did not follow it closely at all.
The unemployment rate is also among the most followed, which is not surprising, as both gross domestic product and unemployment are an important measure of the economy's performance.
Retail and food sales also belong to the measures of economic recovery, especially during this epidemic, as the hospitality and retail sectors are among the industries that have been affected by the closure imposed by the virus.
Based on the three main indicators that economists said they use to measure recovery, the United States has a long way to go before things return to the pre-epidemic situation.
Gross domestic product
After the quarterly growth rate in the United States ranged between 2% and 3.5% for years, real GDP declined at an annual rate of 5% from the fourth quarter of 2019 to the first quarter of 2020, and this coincided with the first month of the crisis that Created by Corona virus.
The Atlanta Fed's GDP model estimates that the real GDP for the second quarter will reach an annual rate of 35.5% when the Office of Economic Analysis publishes its official figure later this month.
Unemployment and retail
Likewise, the unemployment rate is currently 11.1%, i.e. an increase of 7.6 percentage points from last February, and it is still higher than any level reached since 1948 until March 2020.
On the other hand, retail and food sales fell from more than $ 200 billion in February to $ 161 billion in April. But thanks to the reopening of stores, it rose to only $ 190 billion in May, and is likely to be higher in June.
Real GDP is issued only every three months, while retail and food sales figures are issued monthly. The unemployment rate provides a glimpse of just how things went in the middle of the previous month, and these days things may have changed dramatically as new numbers emerge.
Spending level
The author mentioned that 65% of economists surveyed agree that consumer spending is very useful to know the trends of the economy, and it is still too early to say, but consumption expenditures seem to be increasing.
According to the very useful Covid-19 Virus Tracking Panel, overall consumption expenditures, based on the credit and debit card usage data collected by Affinity Solutions, were down 33% in early April, but made significant progress between then and Late last June.
By June 22, spending had fallen by just 6% compared to levels last January, but the wave of HIV infections in the previous June across the country had slowed down spending significantly.
Employment data
The job placement data improved steadily from its low level in early May, but it is still down by 23% compared to its level a year ago.
Initial claims have also decreased every week since the previous March 28, meaning for 14 consecutive weeks, but an average of 4.3% per week over the past four weeks, compared to an average weekly decrease of 13.6% over the previous ten weeks.
So, how do we know when things get better? According to the survey, things are expected to improve when real GDP rises and unemployment falls, and initial evidence may be latent in people's willingness to spend, but regardless of what we expect, most economists agree that it may take a very long time before the economy recovers. In full.