COVID-19

Economic disruption could lead to less reliable economic data

Mitchell Hartman Mar 12, 2020
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Economic data could become less reliable as people change their behaviors during the coronavirus pandemic. Jeenah Moon/Getty Images
COVID-19

Economic disruption could lead to less reliable economic data

Mitchell Hartman Mar 12, 2020
Economic data could become less reliable as people change their behaviors during the coronavirus pandemic. Jeenah Moon/Getty Images
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As much as the stock and bond markets might be signaling to us right now, they don’t tell us much about how the economy’s actually doing. Economic data — most of it from government statistical agencies like the Bureau of Labor Statistics, the Census Bureau, Commerce Department and Bureau of Economic Analysis — tracks that.

But the spread of COVID-19 may compromise the government’s ability to gather that data going forward.

As economic life becomes increasingly disrupted, economic data is likely to become less accurate and reliable. First, because businesses and consumers might not respond to monthly surveys when they have other, more pressing things on their minds. And second, according to Erica Groshen, former head of the Bureau of Labor Statistics, economic behavior itself is changing.

“For example, if all of a sudden you have a lot of people working at home, the patterns of restaurant usage are going to change dramatically,” Groshen said.

And that could make the basket of goods and services that’s used to track consumer inflation less representative of peoples’ actual spending.

Sam Stovall, chief investment strategist at CFRA Research, said our economic reality is currently changing faster than the data can track. Stovall said government reporting on employment, spending, and investment will eventually be revised. But by then … ?

“The economic data will simply end up being confirmational,” Stovall said. “The market itself is the leading indicator, and that is already telling us it believes that the globe is going to be heading into recession.”

In ordinary times, the Federal Reserve would be reading the economic tea leaves of government reports to chart monetary policy. But, according to former Fed governor Frederic Mishkin, this is an unprecedented moment.

“What’s happening is a huge shock that basically the economic data is not going to reflect very clearly for a while,” Mishkin said.

COVID-19 Economy FAQs

New COVID-19 cases and deaths in the U.S. are on the rise. How are Americans reacting?

Johns Hopkins University reports the seven-day average of new cases hit 68,767 on Sunday  — a record — eclipsing the previous record hit in late July during the second, summer wave of infection. A funny thing is happening with consumers though: Even as COVID-19 cases rise, Americans don’t appear to be shying away from stepping indoors to shop or eat or exercise. Morning Consult asked consumers how comfortable they feel going out to eat, to the shopping mall or on a vacation. And their willingness has been rising. Surveys find consumers’ attitudes vary by age and income, and by political affiliation, said Chris Jackson, who heads up polling at Ipsos.

How many people are flying? Has traveled picked up?

Flying is starting to recover to levels the airline industry hasn’t seen in months. The Transportation Security Administration announced on Oct. 19 that it’s screened more than 1 million passengers on a single day — its highest number since March 17. The TSA also screened more than 6 million passengers last week, its highest weekly volume since the start of the COVID-19 pandemic. While travel is improving, the TSA announcement comes amid warnings that the U.S. is in the third wave of the coronavirus. There are now more than 8 million cases in the country, with more than 219,000 deaths.

How are Americans feeling about their finances?

Nearly half of all Americans would have trouble paying for an unexpected $250 bill and a third of Americans have less income than before the pandemic, according to the latest results of our Marketplace-Edison Poll. Also, 6 in 10 Americans think that race has at least some impact on an individual’s long-term financial situation, but Black respondents are much more likely to think that race has a big impact on a person’s long-term financial situation than white or Hispanic/Latinx respondents.

Find the rest of the poll results here, which cover how Americans have been faring financially about six months into the pandemic, race and equity within the workplace and some of the key issues Trump and Biden supporters are concerned about.

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