Trend watch and what's new this week
First, given the sustained decline in U.S. infections (slide 3), we will no longer include the regional U.S. and the state-level views of infections every week. We will continue to monitor those trends and will highlight them as conditions warrant.
School-aged new cases finally appear to be stabilizing (slide 7), holding steady for the first time since early December 2021. This is an encouraging development insofar as this group accounts for 14.4% of all new U.S. COVID-19 cases and has seen the fastest growth among the age cohorts during 2022.
This week, we update restaurant reservations (slide 8), which flipped positive and are now at their highest level since the start of the pandemic. We also revisit hotel occupancy (slide 9), which rose for the fourth straight week and are at their highest level since mid-November 2021.
Lastly, we highlight temporary staffing levels (slide 10), which have rebounded sharply after the typical lull around the holidays.
We are encouraged by the improvement within the activity-based data. As we highlighted last week, the travel-related data typically strengthens in February. Still, these are multi-week improvements. Case in point are restaurant reservations, which are at a two-year high.
These are corroborated by solid increases during January by retail sales and consumer spending more broadly, and new orders for durable goods.
However, the dark clouds are gathering as a result of the Russian invasion in Ukraine. Global energy markets are pricing in prolonged disruptions given Ukraine is the 4th largest natural gas exporter and Russia is among the largest crude oil exporters with over 7.5 million barrels per day.
The biggest impact to the U.S. economy is that it aggravates inflationary pressures, especially with respect to higher gasoline prices. Thus, the Russian invasion is a modest negative for U.S. economic growth. Obviously, a quick resolution or diplomatic solution would blunt much of the economic impact.
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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