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

The Back to normal index compiled by CNN Business and Moody’s Analytics is 93% as of June 18, a new high in the pandemic era.

The index consists of 37 national and seven state indicators that track metrics such as consumer credit, unemployment claims, job postings, domestic air travel, and hotel occupancy.

Latest reading shows America is getting closer to “normal”, but the last mile is going to be tough. Although various states have lifted the pandemic-era restrictions, it has not fully resumed life.

In fact, the pandemic may have altered some of the fundamentals of the economy in such a way that it never becomes “normal” again.

For example, many people still work from home and can do so indefinitely. While some company order their employees to return to the office, others adapt a. at the new normal of more remote work and a more geographically diverse workforce.

Travel is another component of the Back-to-Normal Index that can change forever. People look forward to vacationing again as vaccination rates reopen to tourists in the United States and countries around the world, but business travel may not resume in the same way.

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

“We’re pursuing a return to something we may not return to,” Matt Colyar, associate economist at Moody’s Analytics, told CNN Business.

The entitlement to unemployment benefits is still around twice what was considered normal before Covid. They “are still sky high and need to get down,” said Colyar.

States that have been hit particularly hard by the pandemic – such as the economic powerhouse New York – still have a lot of room for improvement compared to other parts of the country. They are likely to continue to weigh on the index.

That doesn’t mean the U.S. economy won’t regain its pre-pandemic size and strength. Indeed, the speed of the rebound is without modern precedent. But we are heading towards a new kind of “normality”.

For the back-to-normal index to hit 100%, some components need to make up even more ground while others lag behind.

Investor Insights: The characteristics and characteristics of this new economy are having a significant impact on investors. Find out the areas of growth and identify the companies that are most likely to benefit from them.

A backlog in China’s ports could spoil your Christmas shopping

World trade is still a mess. my colleague Laura He reports from Hong Kong:

A coronavirus outbreak in southern China has clogged ports critical to world trade, creating a backlog in shipping that could take months and could lead to bottlenecks during the year-end Christmas shopping season.

The chaos began last month when authorities in southern China’s Guangdong Province canceled flights, locked down communities and suspended trade along the coast to control a rapid surge in Covid-19 cases.

The infection rate has since improved and many operations have resumed. But the damage is done.

The latest: Yantian, a port about 80 kilometers north of Hong Kong, handles goods that would fill 36,000 20-foot containers every day. It was closed for almost a week late last month after infections were discovered among dock workers. Although the port has reopened, it is still below capacity, resulting in a huge backlog of containers and ships waiting to dock.

The congestion in Yantian has spread to other container ports in Guangdong, including Shekou, Chiwan and Nansha. All are located in either Shenzhen or Guangzhou, the fourth and fifth largest comprehensive container ports in the world. The domino effect poses a huge problem for the shipping industry worldwide.

The backlog at Yantian “adds an additional disruption to an already stressed global supply chain, including the significant stretch of sea,” said Peter Sand, senior shipping analyst at Bimco, an association of shipowners. People “may not find everything they’re looking for on shelves when they shop for Christmas gifts later in the year,” he added.

China, China, China: There’s no denying that in order to truly understand the global economy, investors need to look to China.

That’s why we were so pleased that CNN was launching a newsletter on Monday entitled In the meantime in China. Our reporters in Hong Kong, Beijing and around the world will bring subscribers three issues a week with the latest news on China’s rise, analysis of what it means for the world, and predictions of what might happen next. You can sign up until click here.

Next

Monday: Amazon Prime Day begins

Tuesday: Existing home sales in the US

Wednesday: New Home Sales in the United States; EIA crude oil stocks; Income from KB Home

Thursday: US Unemployment Claims; Income from Rite Aid, Darden Restaurants, Nike, and FedEx

Friday: US personal income and expenses for May; Merit from CarMax

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