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With more economic data pointing toward an upturn in activity, it increasingly appears that the recovery is underway.

High frequency data points to bottom chartAs the U.S. economy begins to reopen, there's a growing sense of relief that day-to-day restrictions are being lifted, even if it’s tempered by the realization that the virus itself hasn’t been eradicated and another wave could result in additional restrictions being reintroduced at some point. What does this all mean for the economy? As with the health risk itself, recent developments don’t signal an “all clear,” but do indicate that activity likely bottomed in April. As activities resume, the economy itself is showing clear signs of moving into recovery.

Hard data like GDP is reported at a lag, limiting its timeliness and value. Instead, we can look toward high-frequency data that’s much timelier to help confirm a turning point in the cycle. As illustrated above, measures of mobility and travel have perked up, and retailers are benefiting. The fact that business applications and mortgages for new home purchases are improving are also very telling.

Recently, the positive effects are materializing in other data as well, such as the May retail sales report, which came in much stronger than expected. It will take time for overall output and employment to return to their pre-pandemic levels. There is growing evidence that the recovery is underway, although risks remain. Further volatility is certainly possible, but a return to growth bodes well for risk assets including stocks.

Past performance does not guarantee future results. All investments include risk and have the potential for loss as well as gain.

Data sources for peer group comparisons, returns, and standard statistical data are provided by the sources referenced and are based on data obtained from recognized statistical services or other sources believed to be reliable. However, some or all of the information has not been verified prior to the analysis, and we do not make any representations as to its accuracy or completeness. Any analysis nonfactual in nature constitutes only current opinions, which are subject to change. Benchmarks or indices are included for information purposes only to reflect the current market environment; no index is a directly tradable investment. There may be instances when consultant opinions regarding any fundamental or quantitative analysis may not agree.

Plante Moran Financial Advisors (PMFA) publishes this update to convey general information about market conditions and not for the purpose of providing investment advice. Investment in any of the companies or sectors mentioned herein may not be appropriate for you. You should consult a representative from PMFA for investment advice regarding your own situation.

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