The Winter Of Our Coronavirus Discontent Is Just Starting

Help is on the way, but it will take time. Unfortunately, several months may pass before the vaccines are widely distributed and there’s a material reduction in the spread of the disease. Given the current high numbers of new cases and deaths, and the possibility if not the likelihood that even higher levels will be reached in the weeks ahead, coronavirus blowback still looks set to worsen for the immediate future.

A warning sign that a new phase of softer economic conditions is unfolding is highlighted in survey data for December. The initial estimate of the US Composite PMI, a GDP proxy, slipped to a three-month low. Although the 55.7 print still reflects a moderate expansion (50 is neutral), there is a noticeable “loss of growth momentum” following “rising virus case numbers and re-imposed restrictions in many states, as the post-election uptick and vaccine confidence waned,” advises IHS Markit (IHSM), which publishes the PMI data.

“While vaccine developments mean some of the cloud caused by the pandemic should lift as we head through 2021, rising case numbers continue to darken the near-term outlook,” says Chris Williamson, chief business economist at IHSM. “In particular, resurgent virus numbers were cited as a key factor behind a pull-back in hiring, hinting that the labor market has cooled amid growing caution among employers.”

The end of the pandemic is in sight. The last battle in this war is surviving the winter.

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