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May 18, 2020

Covid-19 : Tracking the Recovery – May 18, 2020


As was broadly anticipated, economic data for the month of April reflected the impact of a nationwide shutdown. Employment, consumer activity and production all registered historic declines. More information on the data can be viewed in our “Weekly Market Commentary.”


For the purposes of this report, we consider the economic path forward in the context of how each state is progressing toward returning to some type of normalcy. This includes getting people out of their homes and back to work and leisure activities they freely enjoyed only a few short months ago.

From a reopening perspective, most states had set a variety of dates in May to begin the process. Roughly half of those target dates have passed as of this writing, and states have implemented the initial phases of their respective plans. Each state’s plan varies widely but thematically, they tend to open low contact business and activities at the outset, then work their way towards activities which don’t easily lend themselves to social distancing protocols. In states where re-opening is broader, such as the inclusion of retail shopping and restaurants, most are implementing capacity limitations and other protocols designed to keep employees and customers more distanced than in the past. Even states that have not officially re-opened or lifted their shelter-in-place directives have made exceptions for specific activities.

States that were early in the re-opening process have generally continued with their plans to normalize activities. At the same time, specific counties in some states have implemented their own unique standards, which have sparked controversy, with perhaps the most publicized being the dust-up between Alameda County, California and Tesla CEO Elon Musk. The Governor of Michigan has also had ample challenges in implementing restrictions, as she has faced protests and court appeals related to her stringent restrictions on activities.

After reviewing state-by-state data, it is clear that the process of loosening restrictions will be very gradual with a significant amount of variation. However, by the end of May it is anticipated most states will have initiated some phase of re-opening. We also know that specific activities that involve mass gatherings will be limited and, in many cases, postponed or cancelled. Professional sports teams are making plans to continue their seasons without fans and many entertainers are delaying tours until 2021. To be sure the re-opening will be slow and gradual, while data from the healthcare system will be closely monitored and considered.

In terms of tracking infection data, it is true that on a national basis, 7-day average infection rates are on a downward trend. However, the decline is being led by the states that were most impacted early on, most of which are in the Northeast. While the numbers are looking more favorable in these densely populated regions, other hot spots are emerging. Nashville, TN, Des Moines, IA, Amarillo, TX, Racine, WS, Central City, KY and Garden City, KS are among larger cities that have witnessed increasing infection rates. More rural communities across the Midwest are also experiencing an uptick in infection rates.

While we do not anticipate another national lockdown, we believe that local assessments based on infection experience and healthcare capacity will drive local decisions concerning a delay in reopening or even stepping back from prior decisions. As New York Governor Andrew Cuomo mentioned in a recent press conference, some degree of infection rate increase is expected as distancing restrictions are relaxed, but a spike will lead to a rethinking of strategy. States have certain metrics they are following to balance off the healthcare risks with the hazards related to remaining in lock-down. These risks are not only economic, but as we are learning have broader impacts on people’s health and well-being.

As always, we will continue to provide you updates in the most comprehensive and cohesive manner possible.
Again, please stay safe and be well!