Five high frequency indicators to track the economic recovery : The Indicator from Planet Money Five "high-frequency" indicators help us track the health of the U.S. economy
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High-Frequency Indicators

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High-Frequency Indicators

High-Frequency Indicators

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UNIDENTIFIED PERSON, BYLINE: NPR.

(SOUNDBITE OF DROP ELECTRIC SONG, "WAKING UP TO THE FIRE")

CARDIFF GARCIA, HOST:

Hey, everyone. Stacey and Cardiff here. This is THE INDICATOR FROM PLANET MONEY. The main economic indicator that tells us how much the economy is growing or shrinking is Gross Domestic Product, or GDP. But GDP is only released for each quarter, and it takes a while for the government to gather all the data for it.

STACEY VANEK SMITH, HOST:

Right. And a quarter - like, three months - is like a lifetime right now. I mean...

GARCIA: Yeah, exactly.

VANEK SMITH: (Laughter).

GARCIA: Think of all that's happening, you know?

VANEK SMITH: I know. I don't even - it's like a different universe. But for example, the GDP report for the months of April, May and June isn't coming out until late July, so it just doesn't really capture all the changes to the economy as the changes are happening.

GARCIA: Yeah, and this actually applies to a lot of indicators. Because of the coronavirus pandemic, so much has happened to the economy so quickly that it's just hard to keep up by using these traditional indicators. I mean, think about it. First, the economy shut down at incredible speed during the early months of the pandemic. Then the government sent trillions of dollars into the economy through a bunch of different policies.

VANEK SMITH: And now parts of the U.S. economy have started reopening and - just maybe - recovering. To keep up with events, we have been following some indicators that are released with a lot more frequency than the GDP. These are known as high-frequency indicators, and the ones we're talking about are released every week or, in some cases, every single day.

GARCIA: So today on the show, five high-frequency indicators. All five of these are indicators of how people are actually behaving - how much they're traveling, eating out, going to work - in their daily lives. And then we are going to tell you what these indicators suggest about the prospects for the U.S. economy.

(SOUNDBITE OF DROP ELECTRIC SONG, "WAKING UP TO THE FIRE")

GARCIA: To guide us through five high-frequency indicators of the economy, we called an old friend of THE INDICATOR's.

BILL MCBRIDE: I'm Bill McBride, the author of Calculated Risk Blog.

GARCIA: Bill is one of our favorite chroniclers of economic indicators, and every Monday he writes about high-frequency indicators on Calculated Risk, his website.

VANEK SMITH: First up on Bill's list of high-frequency indicators - how many people are flying on airplanes every day. So this data comes to us from the Transportation Security Administration, the TSA.

MCBRIDE: They put out how many people go through the checkpoints every day at the airports, and so that's a very reliable dataset from the government. And it's daily, so it gives us a good feel for how many people are traveling by air.

GARCIA: Air travel totally collapsed in the first months of the pandemic. At the lowest point in April, 96% fewer passengers were flying than on the same day last year. But people have slowly started flying again, and now there are about 79% fewer passengers. That's an improvement, though obviously, there is just a long, long way to go before air travel is back to where it was last year.

(SOUNDBITE OF CYMBAL CRASHING)

VANEK SMITH: Bill McBride's second high-frequency indicator - the hotel occupancy rate. So this is the share of hotel rooms in the country that are actually being used by people staying in those hotels.

GARCIA: Yeah, it's the share of hotel rooms that are booked, basically. And if more people are flying or taking trips, then you would also expect the occupancy rate to be going up as well.

VANEK SMITH: So back in early April, when most of the country was still shut down, only 22% of hotel rooms were occupied. But people have started slowly coming back and booking hotel rooms again, and right now about 39% of hotel rooms are booked.

GARCIA: And once again, that's an improvement but also, once again, just still a ways to go because at this time last year, about 72% of hotel rooms were occupied.

MCBRIDE: But one of the interesting little tidbits is that it's more weekend-related than usual, and more low-end hotels than usual are active. So what that means is it's not the business travelers.

VANEK SMITH: Combined with the air passenger travel numbers, it seems like most of the increase in people traveling is for personal travel - people going somewhere on the weekends, staying in a cheaper hotel, not staying in the more expensive hotels that cater to business travelers. And Bill McBride says this is consistent with other data also.

MCBRIDE: Nobody is going to a conference. I mean, conference data - at least as far as I can tell, it's delayed a little bit. But basically, I think conferences are just essentially done for right now.

(SOUNDBITE OF CYMBAL CRASHING)

GARCIA: High-frequency indicator No. 3 - box office movie sales. Movie theaters have actually slowly been reopening throughout the country. There are more than 700 theaters open now, though more than a third of those are drive-in movie theaters. Bill gets the data for movie ticket sales from the website Box Office Mojo.

MCBRIDE: And basically, it's been zero since the beginning of the crisis.

VANEK SMITH: So last year during the second week in June, movie theaters sold $242 million worth of tickets. This year during that same week, movie theaters only sold about $600,000 worth of tickets. So it's not zero, but, you know, Bill says comparatively speaking, it might as well be zero.

GARCIA: Yeah. I mean, to put that another way, movie ticket sales are down roughly 99.8%. People are not going to the movies right now.

(SOUNDBITE OF CYMBAL CRASHING)

GARCIA: Next up, high-frequency indicator No. 4 - people eating in restaurants. This data comes from OpenTable, which is a company that keeps track of how many people eat in restaurants in cities that have at least 50 restaurants and that are in OpenTable's network of restaurants. In late March the number of people eating in restaurants throughout the country had fallen by 100% from the same day the year before. Pretty much nobody was eating in restaurants on that day. And now the number of people eating in restaurants has been down roughly 70% over the past week when compared to the same week last year. That is still terrible, but it is a sign of genuine improvement - much better than a few months ago.

(SOUNDBITE OF CYMBAL CRASHING)

VANEK SMITH: And finally, high-frequency indicator No. 5 - how much are people using public transportation? So this data comes to us from Apple, which anonymously tracks how people move throughout their city while using their iPhones.

GARCIA: Yeah. Apple looked at how much people were using public transit in the middle of January before the pandemic started hurting the U.S. economy, and then Apple releases data showing how much less people are using public transit now than back then, than back in January.

VANEK SMITH: At one point in April, people were using public transportation 80% less than they were in January, but now they're using it 55% less. So it has come back quite a bit, although, Bill says, this varies enormously by city.

MCBRIDE: New York is still only at 26% of normal. In a place like Houston, it is at, like, 64% of normal.

VANEK SMITH: But overall, these numbers suggest that people are slowly beginning to travel more within their cities and towns either as they return to work or just get out of the house.

GARCIA: Yeah, and that's also a lesson that you might take away when you combine all five of these high-frequency indicators. People are very slowly becoming more comfortable moving around - moving around in their cities and neighborhoods, eating in restaurants, taking public transit and also moving around the country, flying again, maybe staying in cheap hotels for the weekend.

VANEK SMITH: But you can also see just how much less economic activity is happening now than was happening this time last year. And these numbers also suggest that until the pandemic is actually over, there might just be a limit to how much these indicators can recover. The reason is that so many parts of the economy are connected to each other. For example, the fact that nobody's going to the movies or seeing plays or attending conferences for business - all of those things really hurt restaurants and bars, a lot of whom depend on the traffic of people attending these events.

GARCIA: Yeah. And, of course, those activities will be some of the last to recover because they tend to happen indoors in crowded spaces with air conditioning - places where the virus can spread really easily. So when those kinds of activities do start happening again, then we'll have a much better sense of whether the recovery that has just started can actually get the economy back to where it was. And if that does happen, we'll let you know in high frequency.

This episode of THE INDICATOR was produced by Darius Rafieyan and fact-checked by Brittany Cronin. THE INDICATOR is edited by Paddy Hirsch, and it is a production of NPR.

(SOUNDBITE OF DROP ELECTRIC SONG, "WAKING UP TO THE FIRE")

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