Weekly Economic Update August 3, 2020

Brad StevensUncategorized

Ah the rites of Spring in late July.  Baseball opened finally at the time most of us start turning our attention to Football, either pro or collegiate.  We will keep our fingers crossed that both sports are successful in completing what is admittedly a strange and uncharted season this year. 

The Minneapolis Fed released its COVID Dashboard this past week.  The information covered the period from early February, just before the virus hit, to late July.  The industry numbers ran a wide range.  Obviously the depth of the drop in business in ever sector was dramatic.  The drops appear to have hit bottom across the board by April 3.  The important information is how the numbers have rebounded and to what level since that time. From what I can tell, these numbers are indicative of other regions also.

Let’s start with mass transit use.  Wisconsin had the least drop overall, down 40% and is now back to break even.  The numbers normalized at the end of May, about the time the courts ruled that the shutdown there was not legal.  Minneapolis dropped by over 70% and is still down by over 50%.  The amount of work from home assignments appears to be a long term change here.  The area with the largest loss is light rail.  Light rail is down over 95% in ridership.  While express and local bus service has rebounded a bit, local at just under a drop of 50%, express hovering at a drop of 70%, light rail is not coming up at all.  Again, the amount of work from home is causing this loss and it is not expected to change. This will impact the funding and likely the viability of the mass transit in the metro area.

Retail and recreation are next.  For the most part in all markets, retail and recreation dropped 50% from the peak before the virus hit.  Minneapolis has only recovered to being down 25% from before the crisis.  Minnesota overall is back to 9% below.  The outstate area is faring better than the metro.  Wisconsin is only down 5% from the start and actually had popped over into a growth number in very early July.  Their number appeared to settle back down as the second wave came through.  Grocery numbers took the least amount of hit and for the most part are back to par levels of February.  The exception is Minneapolis which is 12% down.  The impact of the civil unrest which closed virtually all the grocery stores in the city is the culprit here.

Job postings are a strong indicator of how things in business are going.  The job posting numbers fell much more gradually than any other area, not really hitting bottom until mid May.  They bottomed out at a drop of 40%.  Minnesota and Wisconsin have trended in the identical fashion and level.  They are currently at about 18% down.  The hope is that this number will breach 0 and move to a growth area by mid September. 

Small business employment fell by 60% before starting to rebound.  Wisconsin fared better on the rebound and is nearly back to par with the pre covid numbers.  Minneapolis and Minnesota as a whole remain the laggard here.  The numbers from MN and Minneapolis were slightly impacted by the civil unrest, dropping them about 10%.  Right now the small business employment in MN and Minneapolis is down about 18% from early this year. No sign that this will improve anytime soon as small businesses have been disproportionally impacted.

Overall, things are coming back.  The recovery looks more like an elongated U or tilted hockey stick.  As long as we can avoid a second shut down, the trends indicate we should be near back to February levels by the end of September.

Have a great week.

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