Sumary of The anatomy of a growth scare:
- And four gauges of the recovery—market prices, “high-frequency” activity indicators, hard data and economists’ forecasts—are all giving mixed signals.
- In March investors sold them off as they took fright at rising inflation, pushing the ten-year Treasury yield up to 1.7%.
- The growth scare seemed to intensify on July 19th, when the ten-year yield dipped to 1.19%.
- The S&P 500, America’s main stock index, fell by 1.6%, with smaller companies hit hardest.
- Our “economic-activity index” for the country, using Google data on visits to workplaces, transit stations and sites of retail and recreation, has dropped by about 5% since peaking in June (and there is little sign of greater mobility from July 19th onwards, when England lifted all domestic covid-19 restrictions).
- The hardest sort of data—releases from official statistical agencies—do not yet reflect the impact of rising covid-19 infections.
- Measures of economic “surprise” in activity indicators (ie, a comparison of the published numbers with economists’ forecasts) still look fairly positive, especially in Europe.
- Owing in part to the movements in activity indicators, economists’ revisions to their expectations of GDP growth—our fourth measure—also send mixed messages.