Economic activity in the United States began to contract sharply at the very end of February and into early March as the coronavirus spread across major metropolitan areas, like New York City, Chicago and Atlanta. Shops closed, travelers canceled flights and diners began avoiding restaurants, even before some states issued formal stay-at-home orders.Real-time economic gauges, like a series on Chase credit card spending produced by J.P. Morgan, show that spending pulled back sharply in early March and has gradually rebounded since late April. Even so, spending remains well below pre-crisis levels.
In 2020, many indicators of global activity are expected to register the sharpest contractions in six decades. A large swath of services has seen a near sudden stop, reflecting both regulated and voluntary reductions in human interactions that could threaten infection. Partly owing to an unprecedented weakening in services-related activities, global trade and oil consumption will see record drops this year, and the global rate of unemployment will likely climb to its highest level since 1965.
“We’ve already seen signs that the economy is past the trough and is in the recovery phase,” said Matthew Luzzetti, the chief U.S. economist at Deutsche Bank Securities. But there are differences between the overall level of output and the period-to-period change because the former is likely to remain depressed for some time, even as the latter bounces back.
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Based on the spread between the 10-year and three-month Treasury yields, the regional New York Fed compiles data about the likelihood of a recession in the year ahead. It’s updated typically at the beginning of each month, with the last release occurring on Aug. 2.