As we approach the two-year anniversary of the pandemic, it’s reasonable to ask: Will we ever get back to normal?
Increasingly, the answer seems to be no. We may never live as we did in January 2020, and a new normal is almost certain to emerge.
There’s data backing that opinion: the CNN Back-to-Normal Index The index recently slipped as low as 84.4% from a peak above 95% in October. The trend in January has been higher, but the decline shows the economy continues to face challenges.
CNN’s Back-to-Normal Index
Source: CNN.
The Back-to-Normal Index results from a partnership between Moody’s Analytics and CNN Business. It’s comprised of 37 national and seven state-level indicators. It ranges from zero, representing no economic activity, to 100%, representing the economy returning to its pre-pandemic level in March 2020.
The recent decline that began in October corresponds to the rise of the omicron variant. Before that, however, the index oscillated between 90% and 95% since April 2021.
U.S. May Enter a New Normal
Components of the index hint at the changes that may define the new normal.
About a third of small businesses permanently closed in many states. Even in the best-performing state on that measure, South Dakota, 17% of businesses closed. This will change Main Street and downtown districts in many cities.
E-commerce increased during the height of the pandemic. This trend should continue to a degree. Those who can afford to order from delivery services will do so.
Many families will struggle in the new normal. Indeed.com reports job postings in sectors that advertise lower wages have flattened the last few months. These are jobs paying less than $15 per hour.
That could be bad news for the 286,000 Americans who filed initial claims for unemployment benefits last week. That’s the highest level since mid-October and well above economists’ forecast of 220,000.
All this data points to an economy searching for a steady state. But that may be months away.
Michael Carr is the editor of True Options Masters, One Trade, Peak Velocity Trader and Precision Profits. He teaches technical analysis and quantitative technical analysis at the New York Institute of Finance. Follow him on Twitter @MichaelCarrGuru.
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