SUMMARY

  • Spreading Setbacks
  • The Paradox of Thrift
  • Sports Interrupted

This year’s Fourth of July celebrations featured a new twist. In lieu of in-person festivals, many municipalities offered live-streamed fireworks shows. There was a lot to like about watching the pyrotechnics online: No crowds, no mosquito bites, no tired children struggling to get home at the end of the show. (The dazzling bursts from the top of the Empire State Building were spectacular.) But in the end, the night served as a reminder that we are still a long way from normalcy, and we are adapting as best we can.

As Independence Day dawned, several parts of the United States were experiencing bursts of coronavirus cases. As of this week, only half of U.S. states remain on their intended reopening paths. Twenty states have paused, while five are retreating. Arizona, California, Colorado, Florida and Texas have closed businesses including bars, movie theaters and indoor restaurants.

Economic progress will only occur at the mercy of COVID-19; growth will be held back by fear of the spreading virus. It will be important to watch the impact of the renewed outbreaks on consumers and policy makers. Lessons may be learned from the affected areas that will be useful elsewhere.

Weekly Economic Commentary - 7/10/20 - Chart 1

Many new metrics are helping us to gauge the recovery. In a recession characterized by a nearly complete halt to consumer activity, gauges of consumer spending are most helpful. JPMorgan Chase has answered the call by publishing spending patterns of its 30 million active credit and debit card holders. The information is rich, as it contains spending categories and locations as well as whether the cardholder was present in the store for the transaction. The report highlights some interesting correlations: States that experienced more in-person restaurant spending tended to see greater growth in viral spread. And across states, older consumers, who are at greater risk of succumbing to COVID-19, were more likely to have reduced their spending during the lockdown.