articles Ratings /ratings/en/research/articles/210226-economic-research-u-s-real-time-data-a-weaker-february-likely-offset-a-better-than-expected-january-11854495 content esgSubNav
Log in to other products

 /


Looking for more?

In This List
COMMENTS

Economic Research: U.S. Real-Time Data: A Weaker February Likely Offset A Better-Than-Expected January

COMMENTS

Economic Research: U.S. Biweekly Economic Roundup: Groundbreaking March Jobs

COMMENTS

Global Economic Outlook Q2 2021: The Recovery Gains Traction As Unevenness Abounds

COMMENTS

Economic Outlook Emerging Markets Q2 2021: Tailwinds From Stronger Global Growth, But Several Challenges On The Radar

COMMENTS

Slow Economic Recovery Will Burden Latin American Insurers' Performance This Year


Economic Research: U.S. Real-Time Data: A Weaker February Likely Offset A Better-Than-Expected January

Summary Of Indicators
Indicator How the data looks
Aggregate
Weekly Economic Activity Index The WEI stood at -3.3% compared with the year-ago level for the week ended Feb 20. The decline could be attributed to a decrease in fuel sales and rail traffic due to winter storms, which more than offset the fall in initial claims and increase in tax withholding and electricity output.
Virus and mobility
States' status on business restrictions Businesses in most states remain open as authorities eased restrictions as infection rates decline.
New COVID-19 cases New COVID-19 cases continue to decline in the U.S. for the fifth consecutive week, and other developed countries follow a similar trajectory.
Vaccinations as % population The U.S. administered vaccinations to nearly 14% of the population, and every day has vaccinated nearly 1.5 million people, on average, the past two weeks.
Google mobility Mobility data remained mixed as some states showed improvement amid a decline in new COVID-19 cases. For instance, New York and California saw a rise in mobility as local authorities eased restrictions on closing times for outdoor places. Meanwhile, in Texas mobility dipped due to the snow storm.
Consumer spending
Johnson Redbook Index Johnson Redbook same-store sales grew by 2.9% (year over year) for the week ended Feb 20. In February, same-store sales rose an average of 2.5% per week compared with 3.6% average growth in January.
Consumer loans: credit cards Consumers appear to be more cautious in the middle of the first quarter as consumer credit card loans continued to decline. Deleveraging has helped aggregate household balance sheets improve further.
Low-income versus high-income household spending Low-income household spending through credit and debit cards is holding up well, partly boosted by stimulus and recovery in the labor market. However, high-income household spending growth remained subdued as discretionary spending is constrained.
Consumer sentiment Consumer confidence has been weak since the second wave of coronavirus hit the country, with uncertainty about the future of the virus and the economy.
People-facing COVID-19-sensitive
Open Table Restaurants as of Feb. 22 are still operating at 47% below levels at this time last year. Restaurants in New York and Illinois are 71% and 66% below, respectively.
Air traffic Air traffic stayed 57% below levels in the same period last year, reflecting the impact of COVID-19 on the tourism sector.
Current and future activity
Energy demand U.S. energy output plummeted in the last two weeks as cold weather hit the South.
Raw steel capacity utilization Raw steel capacity utilization has seen a steady increase after hitting rock bottom in May last year, now just below 4% from its 2019 average. This reflects a rebound in industrial activities in the U.S., supported by a pickup in domestic demand as well as external demand for goods.
Rail traffic Rail traffic growth slowed for the third consecutive week after hitting record-high growth for the week ending Jan. 23. However, it's still well above the 2019 average.
New business applications New business applications dipped last week but remained elevated.
Home mortgage applications Mortgage applications declined in the last two weeks. Some of the decline can be chalked up to unfavorable weather conditions across large swathes of the country and some simply to a reversal to a sustainable trend.
Prices
Lumber futures Lumber prices surged through the roof due to high housing demand and tight supply of lumber.
Industrial Metal Price Index Industrial metal prices continued to trend higher and stayed above 2019 average for more than two months on the back of steady recovery in both domestic and external industrial activities.
Labor market
Initial jobless claims/continuing claims Initial jobless claims have been slowing for the past two weeks, to 0.73 million after surging to nearly one million for the week ended Feb 20. Continued unemployment insurance claims inched up during the week ended Feb. 13 (though they were the second-lowest since last November), mainly due to Pandemic Emergency Unemployed Claims (PEUC), which rose by one million claims, while regular state unemployment insurance and Pandemic Unemployment Assistance (PUA) declined.
Indeed job postings Indeed job postings have been recovering at a steady pace and recorded their highest growth since the labor market recovery began in May.

Since our last real-time economic data report (see "U.S. Real-Time Data: The Recovery Stalled In January," Jan. 29), coronavirus cases, hospitalization rates, and death rates in the U.S. have continued to ease from their recent highs (see chart 1), though sadly the U.S. also reached a new milestone of 500,000 deaths earlier this week. The pace of COVID-19 vaccines administered slowed to 1.3 million vaccinations per day (seven-day average) last week since peaking at 1.6 million before the weather disruptions across the country (see chart 2). The pace of vaccinations is likely to accelerate given improvement in weather and supply.

Businesses in most states remain open as of Feb. 22, with no states "mostly closed" (Oregon and New Mexico were closed in January) and nine states that previously were considered to be "mixed" now "mostly open" (see chart 3). Mobility measures across the nation slipped following the spike in coronavirus cases around the holidays and have since failed to improve (see chart 4). Mobility levels in the U.S. on Feb. 20 were 29% below precrisis levels, their lowest since June. Mobility improved slightly in Florida, New York, California, and Illinois in recent days, while Texas and its surrounding area, ravaged by the snowstorm, saw mobility levels plunge to record lows.

All told, a widely followed composite indicator of real-time economic activity--from the New York Fed--indicates that recovery slowed in the latter part of the fourth quarter and into February (see chart 5). The Feb. 20 weekly average trend fell below its 13-week moving average--the first time in this recovery. Still, because of January's higher-than-expected activity, first-quarter GDP so far remains better than the average per month in the fourth quarter (see "A Stronger-Than-Expected January Sets The Stage," Feb. 19, 2021).

We have all along expected March to be the best month in the first quarter. If that is how it indeed unfolds, our first-quarter GDP growth forecast of 0.8% is likely going to understate the strength for the quarter. (For more on our December forecasts, see "Home For The Holidays," Dec. 2, 2020.)

Stimulus Has Boosted Lower-Income Households' Spending

Consumer spending in retail stores also slowed in January and February, according to weekly same-store sales data (see chart 6). However, this contrasts with the census-based monthly retail sales data for January, which showed a surge in sales by a hefty 5.3% with broad-based strength. The extension of income support from the December stimulus package, the reopening of the economy on vaccine rollouts, and a strong housing market have boosted prospects for retail sales.

Spending among low-income households surged in early January and has remained strong, dwarfing the lift in spending among high-income households. This highlights the outsize effect the extended federal stimulus has had on low-income families. It is in line with our assessment of the economic gains from fiscal stimulus to lower-income households, which, given their larger marginal propensity to consume, generally spend more of their checks (see "Bang For The Buck: How U.S. Fiscal Stimulus Could Benefit The Recovery," Dec. 15, 2020).

Opportunity Insights' Economic Tracker shows that the effects of stimulus payments signed into law in late December increased spending among lower-income households significantly but had little impact on higher-income households' spending (see chart 7). Government stimulus, including the additional one-time transfer payment of $600, an extended unemployment benefit booster, and the extension of various moratoriums (student loans, housing), raised spending by lower-income households.

Still, despite a drop in infection rates, the fear now is that new variants of COVID-19 may slow the pace of economic activity in the U.S. (and world) returning to normal levels. An increase in the number of cases will put more strain on health care resources and lead to more hospitalizations, and potentially more deaths. Perhaps that's why consumers don't yet see a reason to perk up, with sentiment readings back near April lows (see chart 8). Not surprisingly, air travel continues to struggle while restaurant dining has improved--it is still 47% below year-ago levels (see charts 9-10). Together, they led to fewer credit card swipes, which translated to declining overall consumer credit (see chart 11). Some part of accumulated excess savings may have also gone to paying down debt.

Unemployment Claims Remain High As Job Openings Pick Up Slightly

Moreover, while states have opened, the jobs front remains challenged. In the near term, the virus controls the speed of economic recovery, evident in unemployment claims data, which remain above 700,000, 3x the precrisis levels. First-time jobless claims in the week ended Feb. 20 and continuing claims for the week ended Feb. 13 have declined, though remain elevated (see charts 12-13).

One complication when trying to map claims to the real economy is the extension of fiscal support through March (passed in December in the $900 billion support package) that reinstated eligibility for many unemployed. It is likely that many of the recent first-time claims were by previously unemployed people resuming their benefits, as opposed to those who just lost their jobs.

On the bright side, we have also seen a recent pickup in job openings on Indeed.com after a slowdown heading into 2021 (see chart 14). Job opening gains tipped above the zero threshold on Jan 20 and steadily climbed to a 3.9% pace on Feb 12. Still, the distribution of employment gains since the start of the crisis remains skewed to high-earning workers (see chart 15). Employment for high-earning workers is over 1% above precrisis levels on Jan. 25, middle-wage earners are 6.8% below, and low-earning workers remain 24.2% below, according to tracktherecovery.org.

Industrial Supplies Continue Their Recovery

What hasn't changed in the last 15 days is that demand for industrial supplies continues to recover, and factories are increasingly using their capacity to fulfill growing internal and external demand. Railway traffic is well above 2019 rates as the trade of goods steadily recovers (see chart 16). Prices of industrial supplies have increased in tandem, including oil prices. Oil prices are now above $50/barrel (WTI), which could be a lifeline for the sector, where rig counts have started to increase but remain well under pre-pandemic levels (see chart 17).

After a year-end surge, applications for new business formations have dipped back to their post-April rate of around 20% year over year (see chart 20). However, the composition of these new applications is more likely to be nonemployers, according to a recent Atlanta Fed paper (Dinlersoz et al., 2021), and, with that, less impetus for job creation in the near term.

Home purchase mortgages have also slowed though remain elevated (see chart 21). Demand for homes has outstripped supply, which has led to builders staying busy and optimistic in their outlook. Lumber prices in the futures market remain high, even as they traced back some of the gains in January (see chart 22).

Chart 1

image

Chart 2

image

Chart 3

image

Chart 4

image

Chart 5

image

Chart 6

image

Chart 7

image

Chart 8

image

Chart 9

image

Chart 10

image

Chart 11

image

Chart 12

image

Chart 13

image

Chart 14

image

Chart 15

image

Chart 16

image

Chart 17

image

Chart 18

image

Chart 19

image

Chart 20

image

Chart 21

image

Chart 22

image

The views expressed here are the independent opinions of S&P Global's economics group, which is separate from, but provides forecasts and other input to, S&P Global Ratings' analysts. The economic views herein may be incorporated into S&P Global Ratings' credit ratings; however, credit ratings are determined and assigned by ratings committees, exercising analytical judgment in accordance with S&P Global Ratings' publicly available methodologies.

U.S. Chief Economist:Beth Ann Bovino, New York + 1 (212) 438 1652;
bethann.bovino@spglobal.com
U.S. Senior Economist:Satyam Panday, New York + 1 (212) 438 6009;
satyam.panday@spglobal.com
Research Contributors:Shruti Galwankar, CRISIL Global Analytical Center, an S&P affiliate, Mumbai
Debabrata Das, CRISIL Global Analytical Center, an S&P Global Ratings affiliate, Mumbai
Arun Sudi, CRISIL Global Analytical Center, an S&P affiliate, Mumbai

No content (including ratings, credit-related analyses and data, valuations, model, software or other application or output therefrom) or any part thereof (Content) may be modified, reverse engineered, reproduced or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission of Standard & Poor’s Financial Services LLC or its affiliates (collectively, S&P). The Content shall not be used for any unlawful or unauthorized purposes. S&P and any third-party providers, as well as their directors, officers, shareholders, employees or agents (collectively S&P Parties) do not guarantee the accuracy, completeness, timeliness or availability of the Content. S&P Parties are not responsible for any errors or omissions (negligent or otherwise), regardless of the cause, for the results obtained from the use of the Content, or for the security or maintenance of any data input by the user. The Content is provided on an “as is” basis. S&P PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, FREEDOM FROM BUGS, SOFTWARE ERRORS OR DEFECTS, THAT THE CONTENT’S FUNCTIONING WILL BE UNINTERRUPTED OR THAT THE CONTENT WILL OPERATE WITH ANY SOFTWARE OR HARDWARE CONFIGURATION. In no event shall S&P Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs or losses caused by negligence) in connection with any use of the Content even if advised of the possibility of such damages.

Credit-related and other analyses, including ratings, and statements in the Content are statements of opinion as of the date they are expressed and not statements of fact. S&P’s opinions, analyses and rating acknowledgment decisions (described below) are not recommendations to purchase, hold, or sell any securities or to make any investment decisions, and do not address the suitability of any security. S&P assumes no obligation to update the Content following publication in any form or format. The Content should not be relied on and is not a substitute for the skill, judgment and experience of the user, its management, employees, advisors and/or clients when making investment and other business decisions. S&P does not act as a fiduciary or an investment advisor except where registered as such. While S&P has obtained information from sources it believes to be reliable, S&P does not perform an audit and undertakes no duty of due diligence or independent verification of any information it receives. Rating-related publications may be published for a variety of reasons that are not necessarily dependent on action by rating committees, including, but not limited to, the publication of a periodic update on a credit rating and related analyses.

To the extent that regulatory authorities allow a rating agency to acknowledge in one jurisdiction a rating issued in another jurisdiction for certain regulatory purposes, S&P reserves the right to assign, withdraw or suspend such acknowledgment at any time and in its sole discretion. S&P Parties disclaim any duty whatsoever arising out of the assignment, withdrawal or suspension of an acknowledgment as well as any liability for any damage alleged to have been suffered on account thereof.

S&P keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of their respective activities. As a result, certain business units of S&P may have information that is not available to other S&P business units. S&P has established policies and procedures to maintain the confidentiality of certain non-public information received in connection with each analytical process.

S&P may receive compensation for its ratings and certain analyses, normally from issuers or underwriters of securities or from obligors. S&P reserves the right to disseminate its opinions and analyses. S&P's public ratings and analyses are made available on its Web sites, www.standardandpoors.com (free of charge), and www.ratingsdirect.com and www.globalcreditportal.com (subscription), and may be distributed through other means, including via S&P publications and third-party redistributors. Additional information about our ratings fees is available at www.standardandpoors.com/usratingsfees.

Any Passwords/user IDs issued by S&P to users are single user-dedicated and may ONLY be used by the individual to whom they have been assigned. No sharing of passwords/user IDs and no simultaneous access via the same password/user ID is permitted. To reprint, translate, or use the data or information other than as provided herein, contact S&P Global Ratings, Client Services, 55 Water Street, New York, NY 10041; (1) 212-438-7280 or by e-mail to: research_request@spglobal.com.


Register with S&P Global Ratings

Register now to access exclusive content, events, tools, and more.

Go Back