As the count of coronavirus cases across the United States rises, falls, and rises again, depending on the occurrence of crowd-generating events, the responding economy follows a similar pattern. Whether it be an annual gathering of Harley-Davidson enthusiasts, students celebrating the return to campus after a somewhat-confined set of summer activities, or cheering fans, though limited in number, at a fall football game, we can expect the count of new coronavirus cases to fluctuate.
As the count goes up, public health officials respond by tightening the rules for business openings and closings. The waxing and waning of precautionary rules generate a hesitating, eddy-current economy, one in which it becomes difficult to determine if the tide of economic activity is going out or coming in.
As I’ve noted before, evidence of these enforcement fluctuations is seen vividly in OpenTable’s data on restaurant reservation activity. For example, year-over-year data for seated reservations on Sept. 7 indicates a 30% reduction for Las Vegas, a 68% reduction for Los Angeles, a 76% reduction for New York City, and a 16% increase for San Antonio.
The differences are just as dramatic when one looks across countries. Also on Sept. 7, reservations were down 91% for Australia and 63% for the United Kingdom, but reservations were up 8% for Germany. The U.S. registered a year-over-year decline of 19% on Sept. 7.
Restaurant activity is just one important proxy to use when considering how the economy is faring during the coronavirus. The movement of people and the impact of the virus on the accommodations industry is yet another important indicator.
As shown in the below chart, year-over-year growth in the number of miles driven by people has fallen and is still headed south. Growth in air travel activity fell sharply with the virus, but it shows a bit of recovery. And the same can be said for growth in restaurant and accommodations employment, which is the more current data in the chart. But notice how the employment data seem to be caught in a plateau that isn’t going anywhere. This is evidence of the eddy-current economy.
And when might we break out of the eddy current? This is another way of asking when will coronavirus outbreaks diminish or become more predictable. Given that we humans love being together, part of the answer relates to the availability of vaccines and their acceptance by the vast majority of the public.
Until then, which may be sooner rather than later, we will likely be caught in the eddy current generated by fluctuations in outbreaks of coronavirus cases.
Bruce Yandle is a contributor to the Washington Examiner’s Beltway Confidential blog. He is a distinguished adjunct fellow with the Mercatus Center at George Mason University and dean emeritus of the Clemson University College of Business and Behavioral Science. He developed the “Bootleggers and Baptists” political model.
