Week 10

Trend watch and what's new this week

This week marks the second anniversary of declaration of COVID-19 as a global pandemic. Thankfully, key virus trends are approaching their mid-2021 lows (slide 3). However, global vaccination trends appear to be stalling (slide 4), as have the pace of U.S. vaccinations (slide 5). Still, about 75% of Americans over 12 years old are fully vaccinated and almost half have received a booster.

Given the stabilization in school-aged new cases for four straight weeks, we will longer highlight this sector of the population but we will continue to monitor the data.

Incoming activity-based data was mixed this past week (slide 2 and slide 7), as hotel occupancy and restaurant reservations slipped. Meanwhile, other indicators—such as air travel, staffing, and rail freight—remain solid.

This week, we highlight U.S. air travel (slide 7). It is hovering near 2 million passengers/day, but business travel has been slow to return. We think business travelers will return as ’22 progresses, though it may take until ’23 before spending nears pre-pandemic levels. 

We also revisited back-to-office trends (slide 8). Office usage broadly is more than 60% below pre-pandemic levels, but there are wide variations by city (select cities listed on slide 2) and by industry. 

Bottom line

It remains too early to tell what impact the Russian invasion of Ukraine is having on the U.S. economy. It hasn’t yet appeared in the U.S. economic data. It most certainly has shown up in global energy markets as well as commodity prices.

We remain cautiously optimistic that the impact will be somewhat muted. This is based on the solid momentum coming into March, as evident by most of the activity-based data. 

Ultimately, we maintain our view that the risk of a U.S. recession in the next year is low, though has increased from very low odds just a month ago. While there may be short-term pain for consumers with hotter inflation, much of the spillover effects from the Ukraine situation into the energy markets is likely to shift spending from discretionary consumption to the energy sector within the U.S. economy.

Ultimately, though, we maintain our view that U.S. recession risks are low. While there may be short-term pain for consumers with hotter inflation, much of the spillover effects from the Ukraine situation into the energy markets is likely to shift spending from discretionary consumption to the energy sector within the U.S. economy.

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