Columbia Threadneedle: When might life return to ‘normal’? – June update
Columbia Threadneedle: When might life return to ‘normal’? – June update
By Paul DiGiacomo, Head of Equity Research, Columbia Threadneedle Investments
As one of the world’s largest economies the US is a key focus for investors. With every country attempting to return to normality following the coronavirus pandemic, we are monitoring when US economic activity might get back on track, as well as other measures of “normality” such as entertainment and leisure, high street shopping, and schools reopening. The result is an index that measures progress toward a post-pandemic world.
Our Return to Normal index
As the US continues its Covid-19 vaccination program, the Return to Normal Index measures human activity data relative to pre-pandemic levels. The index is constructed by our data scientists and fundamental analysts and tracks activities in the US, including travel, returning to work and school, brick-and-mortar shopping and eating out. By design, the index is focused on measuring components of daily life rather than economic indicators such as GDP growth. The percentage level will move closer to 100 as daily life normalises, and our analysts will update it on a regular basis.
What has changed?
Since our May update, the Return to Normal Index has climbed further to 76%, with gains across all index components. The pace of lifting restrictions has accelerated, and with the CDC (Centers for Disease Control and Prevention) guidance that masks will no longer be required for fully vaccinated individuals in most settings, we now expect the US could reach the normal range by August or even sooner. Outside the US, vaccine supply constraints persist, and we expect this to be the case through the end of the year in some regions.
Our index suggests we are still 24% below pre-Covid activity levels. The levels of component activity vary: the return to brick-and-mortar stores is 17% below its pre-Covid level and a normal work routine is 20% below. The subcomponent with the lowest level is travel/entertainment: 36% below pre-Covid levels.
What could drive change?