"The New York Fed's Weekly Economic Index (WEI) is reversing course, showing real-time, high-frequency economic data is again turning negative after climbing back from April and May's coronavirus-driven swoon. Why it matters: The index is one of many that show the economy is getting worse in a trend that could be picking up steam.” (New York Fed, July 22, 2020)

A number of recent economic indicators are suggesting that the US economic rebound has been losing steam in July. While the speed of the US economic rebound in May and June was quite rapid, perhaps surprisingly so, nonetheless recent indicators are now less promising. 

Ironically, the US economy previously surprised many economists with May and June with reports that handily exceeded consensus expectations. 

However, recently published Fed data is now showing an unwelcome trend in July. 

The New York Fed has developed early indicator of the economy’s progress based on 10 different daily and weekly indicators covering consumer behavior, the labor market and production.

According to the Fed’s July 21st web commentary, if growth continues on its recent slower trajectory, US annual GDP would sink by 7% in Q3, and decline year over year for the third straight quarter.

Indeed, the slower July figures are consistent with the view that the recovery was always uncertain, particularly since the number of COVID-19 cases continues to increase.

Most interestingly, there was a decline in consumer sentiment in July, and the decline was clearly related to the escalation in the number of COVID 19 cases. 

In addition, the jobs recovery has slowed and, in some cases, reversed as coronavirus cases have surged in sunbelt states where case numbers are climbing, and governors have reinstated economic restrictions.

Finally, history suggests that it takes years to restore the jobs lost from a deep economic downturn. 

After the early 2000 recession, it took four years to restore the former level of payroll employment. 

After the Great Recession in 2008-09, the recovery period was six years.

 In other words, the US is facing a slow and painful economic recovery. Forget about a V shaped economic recovery.

Weekly Economic Index, New York Fed