C-19: Brief US country and market update [minor update Apr '21]

Updated: Apr 22, 2021

In this brief article we update our views on the COVID-19 developments in the US, particularly from an economic impact perspective (previous article here). We note worrying signs of a very slow possible recovery in consumer spending across the country; as tension of potential outbreaks will continue to hold back merchants and consumers alike from engaging in much needed economic activity for some time to come.

Takeaway notes:

  • During the month of June daily cases have surged across the US, as major outbreaks take place in states such as Florida and Texas, reminiscent of the previous surges in New York and New Jersey.

  • Aggregated store opening and revenue from small businesses has taken a nosedive in the last week of June, as fears of the outbreaks, coupled with local level movement restrictions inhibit retail activity.

  • While spending was picking up steam in April and May, likewise, the last 1-2 weeks of June has seen a distinct tail off in this trend. This already indicates a possible W shaped future evolution of the economy, and a further possible slower than expected reversion back to base levels. Aggregated spending is still some -10% from base levels, while accommodation/hotel and food services are still -35% down.

  • The US capital market meanwhile continues to show detachment from economic reality (of spending and retail activity). Major (technology oriented) stocks are generally still showing a steady increase in prices; this includes XLY which represents an all of US consumer discretionary spending basket of assets.

  • It is evident perhaps that at current levels of transmission, the threat of outbreaks strongly undermines the ability for the country to recover consumer spending to previous levels. And thus, until it is contained and controlled better (vs. current efficacy) there is extremely little hope for a speedy recovery.

  • Meanwhile markets are detached for the time being, indicating a possible hard and rapid correction further down the road once markets price in the actual economic reality.


(1) Indicators for the US (left axis) vs. cases per million (right axis)

(2) Asset prices for US stocks (individual and sector baskets), indexed to 10 January 2020. [XLY: consumer discretionary, XLK: technology, QQQ: Nasdaq index]

Updated stats mid-April 2021:

  • Small/medium merchant store opening (merchants) and revenue generated (revenue) still far from baseline levels, 1 year after start of the pandemic

  • Aggregate credit/debit (spend) card spending now tracking above baseline

  • Retail mobility (gps_retail) tracking to baseline levels, however workplace mobility (gps_workplace) still at low levels


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