Earlier this month, Americans received a pleasant surprise: The May jobs report showed that the economic devastation wrought by the coronavirus pandemic wasn't nearly as severe as originally feared. While experts anticipated a net loss of millions of jobs and an unemployment rate near 20%, the U.S., instead, created 2.5 million jobs, and the unemployment rate ticked down from 14.7% to 13.3%.
Jazzed by the news, the stock markets shot up, and policymakers took a victory lap.
But the monthly jobs report, like many other common economic indicators, is just one piece of data in a much larger and more complicated mosaic. For that reason, it may be only of limited use when experts are trying to get a sense of what, exactly, is happening in the economy — especially in the current economic climate.
Americans are raring to know when the economy is going to recover from the pandemic, though, so experts are turning to other, unusual indicators. Here's what they're looking at and what they're looking for.
Some economists are looking at restaurant reservations or foot traffic data to get a sense of how busy eateries are. If more people are going out to eat, experts reason, then they must feel safer not only about going out in public but also spending money — both good signs for the economy.
Data like OpenTable reservations, which have "been encouraging so far," can help track whether business is picking back up, Jason Blackwell, a CFA and chief investment strategist at The Colony Group, recently told Grow.
Like restaurant reservations, measuring how many people are traveling through hubs like airports can also be a signal that people are feeling comfortable about resuming normal activities, including spending on discretionary purchases like travel, says Adam Ozimek, chief economist at Upwork, an online freelancer marketplace.
For example, the TSA processed 87,534 travelers at airports across the U.S. on April 14, 2020, which was approximately 4% of the number it processed on April 14, 2019. But on June 22, those numbers increased to more than 607,000 — showing a significant increase in traveler numbers compared to the spring. Even though the numbers are still down considerably from 2019, economist point to that improvement as a good sign.
"We can see a lot more activity. People are moving and traveling — that activity is really ramping up," says David M. McInnis, principal and co-founder of investment advisory firm East Paces Group in Atlanta. That's both a sign that people are returning to their routines and that the U.S. is on the path to recovery, he says.
Whether business is booming at your local dentist's office is yet another way that economists can measure the health of the economy. That's because, as the The New York Times has pointed out, the pandemic was a notable disruption in what's usually a sound business model. As things open back up, patients will return, and business should return to normal.
That appears to be what's happening.
Data gathered by the American Dental Association near the end of March shows that only around one-quarter of dental practices around the country were able to continue paying their full staff at a full rate during the lockdown, meaning that roughly 75% of them experienced layoffs or furloughs of some kind. But, as of the beginning of June, 77% of dental offices had been able to hire back their entire staff, according to the NYT — an indication that the economy is recovering.
Video by David Fang
"People are getting a little confused by some big numbers," says Ozimek. "They saw 2.5 million jobs [created] last month, which seems like a lot," he says. "But it's only 10% of the jobs that we lost."
Because the economy is experiencing an unprecedented event, a shutdown caused by a viral pandemic, experts say that traditional indicators of economic health, like monthly jobs reports, manufacturing data, or quarterly GDP reports, aren't accurately or reliably collecting and interpreting data.
"Sometimes a data set [like GDP] isn't really helpful, because it's not 100% representative and doesn't measure economic activity exactly," Ozimek says. This, in turn, makes it difficult for experts to accurately assess what's happening, and to try and predict what's going to happen in coming months.
Video by Courtney Stith
Using offbeat or unusual indicators to read the economic tea leaves isn't really new, but generally, experts would be looking at those indicators to try and figure out what's coming — not what's currently happening, or has already happened. For example, digging into the data surrounding Google search terms or RV sales can sometimes give an expert a clue that something in the economy is changing.
When it comes to RV sales, for instance, Nicholas Colas, co-founder of DataTrek Research, previously told Grow that an uptick in sales may be a sign that the economy is on strong footing, since RVs can be an expensive or even extravagant purchase — a combination that suggests buyers have confidence in their financial futures.
The average person, though, should be wary about using these types of indicators to make big personal financial decisions, says McInnis, since data like restaurant reservations or RV sales are "very specific to certain industries."
So, just because you can look at restaurant reservation data or notice that your dentist's office is busier than it was a couple of months ago doesn't mean you're able to accurately gauge the economy as a whole. Be cautious about making any big financial moves in response, like settling on new investing decisions, for example, or deciding to make a big purchase.
Anybody can look at the data, Ozimek says, but even experts aren't always going to be able to get meaningful insights out of it. "It's very easy to be an armchair economy reader," he says.
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