Here is a list of 5 indicators you should watch to gain a better insight into the US economy during this fragile period.
Commercial and Industrial Loans, From All Commercial Banks
With the FED’s aggressive sizeable injection of bank reserves, a surge in lending to small-medium sized businesses has emerged , demonstrated in the chart above.
Ted spreads measure the difference between 3-month Libor and 3-month Treasury Bills Yields. Typically, TED spreads are used to gauge confidence in banking systems, the ‘tighter’ these spreads are (lower), the more confidence in banking systems.
At the peak of the COVID-19 outbreak, towards the end of March, the TED spreads reached a level of 1.32, a level previously during the 2008 financial crisis. Although current levels have fallen, there are still worries in credit markets due to the slump in oil markets.
The second wave of pandemics could place further pressure on the banking sector, both as primary consumer lending hubs and from a business’s stability point of view.
DOE Motor Gasoline Total Products Supplied Data
As you are most probably aware, Oil prices have plunged heavily, much of this decline has been tied directly to global economic shutdowns. For example, in the U.S alone, there was a 50% immediate drop in automobile traffic. The chart above illustrates this with a plunge in motor gasoline supply.
The more recent data shows an uptick in supply, supported by the easing of lockdowns and thus more active drivers. However, countries such as France that eased their lockdown status are now experiencing a second wave of infections, as a result there is a high possibility that the uptick in gasoline supply may be short lived.
U.S. vs Eurozone Equities
Previous reports touched on how lack of unified action from European governments have led to uncoordinated and little tangible action to combat the economic shock of COVID-19, in comparison to the likes of the U.S that has been trillions in various support policies.
This is clearly evident in the equities comparison chart, where US equities have recovered more than 50% of its previous plunge, in contrast to Eurozone equities which is noticeably lagging behind US equities in terms of recovery. Further highlighting the lack of market confidence in European government action.
Total Confirmed COVID-19 Deaths per Million
On the chart above, for all 5 selected countries, COVID-19 deaths have slowed down dramatically. It is interesting to note that Sweden, which did not incorporate a mandatory shutdown has displayed COVID-19 death growth rate levels similar to the U.S and other European countries.