Thursday, March 4, 2021

2021 began with goods being helped, services hurt in the still-COVID world

This week, you're seeing more evidence that the COVID World has resulted in a significant dichotomy in outcomes. In the goods-making part of the economy, things seem to have picked up at the end of 2020 and the start of 2021, as shown by the results of two Census Bureau reports that came out this week.

Manufacturing has seen sizable jumps in both shipments and orders since November.
Construction has also grown in recent months....kind of. Overall construction has gone up by nearly 7% in the last 4 months measured. But as you'll see, the growth is almost entirely in residential construction.
In fact, total private non-residential construction has gone down by nearly 3% in this same time period, showing the shift away from office buildings and other commercial-type construction, and into homebuilding. Low interest rates have encouraged people to buy homes, and more people are working at home, and you can see where these effects are coming into the demand for construction.

And while people buy homes and goods for their homes, they're not going out as much in the COVID World, and that's why sales in restaurants and hotels continue to be depressed.
These losses have been widespread in the restaurant sector, outside of a few fast-food/carry-out operators.
According to a national survey of 3,000 restaurant operators from Feb. 2-10 conducted by the National Restaurant Association, 83% said their total dollar sales volume in January was lower than it was in January 2020. Only 9% reported higher sales in January. Comparing January sales figures, sales were down 30% between January 2020 and January 2021.

With indoor capacity limited in recent months, many restaurant operators who have remained open have focused on carryout. While takeout sales rose, it wasn’t nearly enough to make up for their lost dining sales, according to the survey.

Among Wisconsin operators who said their carryout business increased compared to pre-COVID levels, 69% said those higher sales have made up less than 30% of their lost indoor dining sales, the survey found.
There is some relief coming in the COVID relief bill that is slated to get through Congress in the next week (well, after Ron Johnson's idiocy is disposed of). There is $25 billion set aside to help the hammered food service sector, which is still quite a bit less than the bipartisan RESTAURANTS Act, which couldn't get through Mitch McConnell's legislative graveyard last year.
The restaurant relief is modeled after a $120 billion measure introduced in the last Congress. The grant funding would be available to restaurants and bars that are part of a group with 20 or fewer establishments.

Owners would apply for grants of up to $10 million to cover eligible expenses retroactively to Feb. 15, 2020, and ending eight months after the legislation is signed into law.
With these figures in mind, it makes me want to see if this dichotomy shows up in the US jobs report, both in the form of more jobs in manufacturing and construction, and if food service employment remains far below where it was this time last year (down more than 2.3 million since Feb 2020).

And let's see if these trends start to reverse as the weather warms, more people get vaccinated for COVID, and people move into their new houses with their new household items. Or if things don't change much at all and become our post-COVID normal, which will make for a longer-range economic issue to deal with.

No comments:

Post a Comment