Economic Data Tracker –
Week 16

Economic Data Tracker

April 22, 2022

Our weekly view on the economy including rationale on GDP, jobs report, and Fed policy decisions. Download the entire weekly edition to view timely charts and data providing a comprehensive picture of how incoming economic data affects our economic outlook.

Trend watch and what’s new this week

U.S. COVID-19 infections are increasing modestly (slide 6). New cases in the Western United States continue to fall on a week over week basis, while edging up in the Midwest, South, and Northeast. However, there has been a very modest rise in U.S. hospitalizations thus far (slide 8).

Spring break season is winding down, but it certainly boosted the activity-based data, which remains strong (slides 5 and 7). For example, weekly air passengers held steady at 15.0 million. Air travel is rebounding sharply in 2022 (slide 9), especially corporate, which likely continues as this year progresses.

Meanwhile, a federal judge struck down the mask mandate on airplanes and other public transportation. The four major U.S. airlines have since made masks optional for passengers and employees, as did Amtrak. Some state and local operators, including the New York Metropolitan Transportation Authority, are keeping mask rules for now.

In light of the change in masking rules, we highlight that most employers have steered clear of vaccine mandates for their employees (slide 10). Additionally, in-office trends for white collar workers remain mixed by industry and geography (slide 11). For instance, more than 70% of the legal segment are back in the office. The differences are particularly stark in places like New York City, where just 37% of all office workers are back, but legal is nearly double that at 65%.

Strong housing trends holding up despite rising mortgage rates

On slide 12, we show the inventory of existing single-family homes. Tight supply means the strong housing trend should persist and prices should remain elevated despite higher mortgage rates. While housing affordability is certainly impacted, it likely translates into a shift towards multifamily (slide 13) as some potential buyers are priced out of single-family homes.

Furthermore, this also benefits remodeling activity (slide 14), which remains brisk, as some homeowners choose to improve their existing home rather than paying higher prices for a larger home. 

Our take

While it is too early to cheer since there is a 7 to 10-day lag between new cases and hospitalizations, it is an encouraging sign that hospitalizations have not dramatically increased thus far. That said, the U.S. very quietly passed a milestone: 70% of those over age 5 are now fully vaccinated and nearly half have already gotten a booster (slide 6). The reduced incidence of hospitalizations appears related to the increased vaccination rate.

We also expect that activities will continue to ramp higher, particularly travel, as the year progresses. We are an example of this, as our team has just started a multi-city road show that is booked through the next eight months. Thus far, we have been eagerly greeted by clients, who want to meet in person.

As we outlined here last week, inflation remains a headwind for the U.S. economy. However, as the housing slides illustrate, tight housing supply following more than a decade of underbuilding should ultimately trump higher mortgage rates and higher home prices. It will likely cause a shift towards multifamily units compared to the recent past.

In the near term, higher home prices should encourage more supply (construction) and continued remodeling. That equates to more economic activity, not less. However, it also likely means that housing inflation will persist for the foreseeable future, which informs our expectation for hotter inflation readings lingering for longer, especially when coupled with higher energy prices. 

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