Week 5

Trend watch and what's new this week

With cases, hospitalizations, and now the death rate falling rapidly, the omicron wave in the U.S. is finally in the rearview mirror (slide 3). The regional U.S. and the state-level views of infections have also dramatically improved (slide 7). It’s also supported by a sharp decline in the hospitalization rate and the percentage of beds occupied by COVID-19 patients (slide 8). Moreover, just five states remain above 20%.

Also, the percentage of new COVID-19 cases for school-aged children has leveled off (slide 9). However, the mix between the age cohorts shifted.

This week, we saw a dramatic improvement in the number of motor vehicle rail carloads, which jumped to the highest count since October 2021 (slide 10). That reflects the surge in U.S. vehicle production during January. The additional supply of new vehicles should help ease inflation, which has spiked due to a lack of vehicle inventory. 

Bottom line

Incoming economic data from January remains mixed. However, the January jobs report—one of the most important traditional monthly economic indicators—had a massive upside surprise. U.S. payrolls in January jumped 467,000, nearly four times the 125,000 expected by the consensus. It was coupled with an eye-popping 709,000 more jobs during December and November than previously reported.

Businesses appear to have shrugged off the impacts of the omicron variant, at least with respect to hiring. We’re also encouraged by the bounce in activity-based data following omicron.

Yet, after several weeks of wicked winter weather, another huge winter storm whacked much of the middle to eastern portions of the U.S. again this week. There are power outages, widespread transportation problems, including thousands of flight cancellations by airlines. Accordingly, we expect economic data may remain somewhat mixed in the near term.  

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