In its latest weekly activity update, Goldman – which on Friday saw tentative signs on hope in the spread of the covid pandemic finding “downward pressure on case growth” – looked at real-time economy indicator focusing on consumer and export activity, the labor market and inflation, and found that while the overall state of the economy is far stronger than where it was in March, the upward momentum has reversed and worse, signs of permanent scarring are beginning to emerge.

Here are the details:

Consumer activity: Consumer spending measures rose by 0.2pp to 94.5% of the pre-virus level over the last week, up from an April bottom of 80%.

Of the highly-impacted consumer services industries, the hotel industry recovered the most in July, with foot traffic increasing by 13pp to 55% of the pre-virus level…

… while the transportation industry remains the most depressed, now only back to 25% of the pre-virus level.

Export activity: Goldman’s export tracker indicates that manufacturing exports (ex-aircraft) partially rebounded over the early summer after declining sharply in the spring. Hinting at a possible reversal in activity, over the last four weeks, the tracker declined 5% year-over-year to 90% of the pre-virus level.

Labor market: High frequency data suggest that the labor market recovery is stalling due to the worsening virus situation. Workplace activity measures have declined in the states hit hardest with virus spread and moved sideways in others since late June.

Goldman’s trackers suggest that current household employment is roughly unchanged from the June survey, and that as of July 7 the unemployment rate had risen back up to 10.8% after falling to 10.5% in late June (vs. 11.1% in the June survey).

READ ALSO  US senators spar with Big Tech over legal immunity, politics

Virus spread: As we noted on Friday, when Goldman published a report discussing that the number of new covid cases is starting to flatten, the average number of the four gating criteria the federal government recommends for proceeding with reopening that states are meeting has risen over the past few days….

… as prevalence of COVID-like illness symptoms has declined in several states, potentially suggesting downward pressure on case growth.

But with the level of new cases already very high in several states and on average nationally, state government officials may remain reluctant to push forward with reopening. Please see our State-Level Coronavirus Tracker for greater detail.

Scarring effects: Signs of long-term damage to the economy are mixed. As of June, 83% of job losses since February are deemed temporary, though only 33% of new layoffs in California in July were temporary.

Large-company bankruptcies remain elevated so far in July.

Inflation: Prices of virus-affected services such as hotels and airfares retrenched over the last two weeks and are now down 20% from pre-virus levels but remain well above the bottom of -48% from the beginning of April.

Finally, and perhaps most importantly, perhaps confirming the recent negative reversal in upward trends, consumer sentiment edged lower over the last week, with negative sentiment tweets stubbornly high.

Via Zerohedge