2 wild economic charts we'll be watching closely

 

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Friday, April 9, 2021

Data this spring will look unbelievable, but two big trends bear closer watching.

The U.S. economy is currently lapping the one-year anniversary of the darkest economic days of the pandemic.

As a result, the data we've started to get and the data we're going to see in the coming months will be eye-popping.

Some economists see several months of job gains north of 1 million, potentially two-straight quarters of 10%+ GDP growth, and inflation readings that could hit multi-decade highs. And while we know this noisy data is coming, these figures will still likely trigger market moves, will still be covered in The Morning Brief and elsewhere, and still be hard to believe.

In the coming week, the March report on retail sales will be released and data from the team over at Bank of America Global Research suggests this report will show sales grew 11.1% last month, excluding auto spending. In February, you might recall, retail sales were a flop.

And in its note previewing next week's coming retail report and taking stock of how re-opening trends are impacting spending geographies, BofA includes a series of industry changes in both one-year and two-year spending trends, according to the firm's internal card data.

And there are two charts in here that stood out to us and that we think bear close watching in the coming months.

The first is airlines. Spending on airlines has gone literally off the chart in the last few months.

Airline spending has surged by several hundred percentage points in the last few months as we lap a period in which air travel was essentially at a standstill. Comparing recent spending to the same months in 2019, however, we still see spending well below pre-pandemic levels. (Source: Bank of America Global Research)

Which comes as little surprise — in the spring of 2020 airline spending fell more than 100% because not only did bookings drop but refunds outpaced new bookings as well.

But as we see in this chart, airline spending is still down on a two-year stack, indicating that there's work to do for this sector to get back to anything like pre-pandemic levels. How quickly this trend returns to 2019 levels will be a good indicator of how much travel demand lasts past the spring burst of enthusiasm.

Another interesting sector is home furnishings, which tanked initially last year but then surged and remained elevated all through the last 7 months of 2020 as people were at home more and so wanted to make changes to their domiciles. And even as some of the initial pandemic demand has worn off, on a two-year stack we see spending on the home is notably elevated.

Spending on furniture has been robust for much of the last year, but even when you back out pandemic distortions spending is notably elevated against pre-pandemic levels. This indicates people still expect to be spending a lot of time at home and want to upgrade their furnishing as a result. (Source: Bank of America Global Research)

If workers are called back to the office and kids return to school, it will be interesting to see how quickly — or not — this trend normalizes. Think of this as a proxy for how confident workers are they will be able to be (or required to be) at home. And another way of tracking how close life is to getting back towards what we thought was normal before COVID-19.

By Myles Udland, reporter and anchor for Yahoo Finance Live. Follow him at @MylesUdland

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