Interesting conversation yesterday with someone about the economic “Recovery.” It was a reminder to always put data into broader context.
Looking at absolute performance while ignoring relative numbers is a recipe for being misinformed.
But by any measure, we are still deep in a recession. Most of the economic indicators I track are still “off the charts.” Here is some context that explains why this economy is not remotely recovered from the effects of the pandemic and lockdown.
• Unemployment Rate: U-# unemployment peaked at 10% in 2009 – it is 10.2% today;
• Non-Farm payroll workers: There were 152.463 million people employed in February 2020; That fell to a low 130.303 million in April; it has since recovered to 139.582 million. There are 12.88 million people who have lost their jobs since the pandemic spread and have still not found new ones since the recession began.
Look back at the GFC: Peak to trough, the total job loss in 2007-10 was 8.7 million. There are 48% more people unemployed right now than at the peak of the GRF.
• Existing Home Sales: The Existing Home Sales (Seasonally Adjusted Annual Rate) were at 5.76 million in January 2020; they bottomed in May 2020 at a (SAAR) of 3.91 million, have since recovered to 4.72 million in June 2020. The current annual rate is still 18.1% below where it was to begin the year.
Its not all grim; some of the data is showing strong recoveries (with an asterisk):
• Retail Sales: One of the few bright spots in the economic data: Advance Real Retail and Food Services Sales is now higher than it was pre-lockdown. It was $204.63 billion in January 2020; it hit $207.16 billion in July 2020. Economists credit extended unemployment benefits, $1,200 stimulus checks, and $600 step unemployment for the increase.
• New Home Sales: They account for only about 16% of all home sales, but New Home Sales are back above their earlier highs. In January 2020 they were being sold at a ( ) of 774,000; In April 2020 that fell to 571,000. June just edged out January out with a recovery to 776,000 new homes sold.
Note: We are still far off of the New Hime Sale peak in in July 2005 at 1.39 million.
• Stocks: This was the fastest move down in both the markets and the economy and not surprisingly, the fastest snapback in the stock market.
By most economic measures, we are still WORSE THAN WE WERE AT THE PEAK OF THE GREAT FINANCIAL CRISIS IN 2008-09.