U.S. Falling Behind Italy Recovery

For weeks, I’ve expected the U.S. to largely follow the path of Italy – and so far it has. Unfortunately, the last few days, U.S. cases have not been declining as fast as Italy.

Italy (+ 14 days) vs. US Covid-19 Cases

As seen in the graph, the cases matched well until about April 11th when the US has started staying much higher than Italy.

If we calculate a 5 day average of cases to remove testing variability, we can see the US is now close to 80% of peak cases while Italy was only 60% at this time.

It seems rather – and probably naturally – that we are now closer on the EU path. Like the EU, we have different ‘countries’ (i.e. states) with different restrictions. This is expanding our plateau period

EU (+9 Days) vs. US Covid-19 Cases

Note, however, that both Italy and the EU graphs suggest about 60% of peak cases in the US on May 1st. Thus, it is possible we end up converging still.

A good reason for the increase in cases yesterday is better testing – so that is a good thing.

Retail Sales Collapse

This morning retail sales were announced for March. They were down a record 6.2% in one month. As you can see clearly from this graph, this was the biggest drop on record.

Retail Sales from 1992 to 2020

The largest drop in one month in the financial crisis recession was only around 4%.

Even though this is a larger drop than any month in 08-09, it will probably be closer to -20% to -30% in April. Stores were only closed about 1/3 of the month of March.

As I mentioned in my economic updates, this recession will be far deeper than any recession since the Great Depression and will take a long time to recover from.