May 5, 2020 Update: Animal Spirits and Economic Activity
By Paul Hynes, CFP®
We are beginning to sense signs of life and an early indication that the U.S. economy may be in the initial stages to a recovery.
For example, during the week ending May 2, 2020, the number of airline passengers going through TSA checkpoints was up 26% from the week prior, and up 40% from two weeks ago. The amount of gasoline being supplied to dealers has been growing for three weeks in a row. Hotel occupancy is up compared to a month ago, and so is railcar traffic—a lead indicator for overall economic activity.
If you’ve been outside, you’ve probably noticed more cars on the roads. It may be an indication that more people are heading back to work to prepare for a phased re-opening of a shuttered business. And, since technology is everywhere, and we rely so much on our phones, it is interesting to note that routing requests on map apps are way up compared to mid-April. We don’t need a routing request to get around the house, but once we leave our homes, we’re back to “help me” find my way around.
Yes, economic activity is still down from the levels we saw last year. Unemployment reports have been terrible, and will likely remain bad for a while. Yet, things are looking “less worse” in that area recently as well.
We are beginning to see signs of life. It’s a sign that our animal spirits are still strong. It signals that people generally like to do things, buy things, and enjoy their lives—which in turn leads to economic activity. It’s a small start, and definitely something to be hopeful for.
Stay healthy. Stay hopeful. And, let’s stay in touch. We’ll all get through this together. Call or email me if you’d like to discuss this or anything else. I’m here to help, any day, any time.
Source: Light at the End of the Tunnel, by Brian Wesbury, Chief Economist, First Trust Advisors LLP, May 4, 2020.