U.S. Risks Coronavirus Recession 2.0

As states relax shelter-in-place orders, the economy should bounce back a bit this month and next. Continued fears among consumers and businesses mean the U.S. won't be back to February's levels any time soon, but the early April collapse might mark a low as we adjust to our new pandemic normal. The bigger worry might be July, as three key pillars of economic support are set to go away. Without strong momentum building during the next couple of months or extensions of fiscal relief, we could have another downturn toward the end of the summer.

A variety of measures suggest that economic activity bottomed in the second week of April. This coincided with concern about the threat of coronavirus beginning to wane and as Americans began moving around outside their house a little. It's not hard to show a little growth relative to a period when most Americans are locked down. It bears noting how even rapid growth for several weeks is barely making a dent in the hole that exists in some industries. For example, although passenger traffic for air travel is up about 50% from the lows in mid-April that just means it's down roughly 94% year-over-year rather than 96%.