Stocks week ahead: US economy is never getting back to ‘normal’

The back-to-normal index, created by CNN Business and Moody’s Analytics, stands at 93% as of June 18, a new pandemic-era high.

The index includes 37 national and seven state-level indicators that track metrics such as consumer debt, unemployment claims, job postings, domestic air travel and hotel occupancy.

Latest readings suggest the US is approaching “normalcy”, but the last mile will be tough. Although various states have lifted pandemic-era restrictions, life has not fully resumed as before.

In fact, the pandemic has changed some fundamentals of the economy in a way that means it is never going back to “normal”.

For example, many people are still working from home and can continue to do so indefinitely. While some companies are ordering their employees to return to the office, others are adjusting to a new normal of more remote working and a more geographically diverse workforce.

Travel is another component of the back-to-normal index that can be changed forever. People are excited to vacation again as the United States and countries around the world reopen to tourists, but business travel may not resume in the same way.

After more than a year due to virtual meetings, companies may be less inclined to fly employees around the world. Moody’s Analytics doesn’t believe business travel will return to its pre-pandemic levels anytime soon, which in turn will also affect air travel and oil demand.

“We’re tracking the return of something we can’t get back,” Matt Collier, associate economist at Moody’s Analytics, told CNN Business.

Unemployment benefit claims are still almost double what was considered normal before Covid. They are “still in the sky and they have to come down,” Collier said.

States that were particularly hard hit by the pandemic – such as economic powerhouse New York – still have much room to improve compared to other parts of the country. They will likely continue to be a drag on the index.

This does not mean that the US economy will not regain its pre-pandemic size and strength. In fact, the momentum of the rebound is without modern precedent. But we are moving towards a new kind of “normal”.

For the back-to-normal index to reach 100%, some components would need to build up even more ground, while others would lag.

Investor Insight: The characteristics and characteristics of this new economy have major implications for investors. Explore growth areas, and you can identify the companies that are most likely to benefit.

A backlog at China’s ports could ruin your holiday shopping

Global trade is still a mess. My colleague Laura Hay reports from Hong Kong:

A coronavirus outbreak in southern China has shut down important ports for global trade, could take months to clear a shipping backlog and shorten the year-end shopping season.

The chaos began last month when authorities in the southern Chinese province of Guangdong canceled flights, closed communities and suspended business along its coastline to spark a rapid spike in Covid-19 cases.

An aerial view of shipping containers parked at Nansha Port in Guangzhou.

Since then the infection rate has improved and many operations have resumed. But the damage has been done.

Latest: Yantian, a port about 50 miles north of Hong Kong, handles the goods that fill 36,000 20-foot containers every day. It was closed for about a week last month after the dock workers were found to be infected. While the port has reopened, it is still operating below capacity, leaving a huge backlog of containers waiting to be released and ships waiting to dock.

The congestion in Yantian has spread to other container ports in Guangdong, including Shekou, Chiwan and Nansha. All of them are located in either Shenzhen or Guangzhou, which is the fourth and fifth largest comprehensive container port in the world. The domino effect is creating a major problem for the world’s shipping industry.

The “Yantian backlog” is adding additional disruption to an already stressed global supply chain, including its critical sea legs, said Peter Sand, chief shipping analyst at BIMCO, a consortium of shipowners. “People may not find what they were looking for on the shelves when they shop for Christmas gifts at the end of the year,” he said.

China, China, China: There is no denying that for investors to really understand the global economy, they need to focus on China.

So were so happy that CNN is launching a newspaper in China on Monday called the Beach. Our reporters in Hong Kong, Beijing and around the world will bring clients three editions a week, featuring the latest news about China’s rise, what it means for the world, and analysis on what could happen next. You can sign up by clicking here.


Monday: Amazon Prime Day begins

Tuesday: Current home sales in the US

Wednesday: new home sales in the US; EIA Crude Oil Inventory; earning from kb home

Thursday: US jobless claims; Revenue from Rite Aid, Darden Restaurants, Nike and FedEx

Friday: US personal income and spending for May; earning from carmax

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