economy Markets

4 Charts Reveal Extent Of Collapse In US Services Sector

Not all of them are necessarily intuitive.

Speaking purely in economic terms, the US services sector is quite obviously the biggest casualty of COVID-19. The US economy is, after all, the largest on the planet, and it lives and dies by the consumer. Until the pandemic hit, Americans were still willing to open their wallets, helping to keep the Titanic afloat despite myriad evidence to support the contention that between the trade war and election uncertainty, business spending was likely to remain subdued for the foreseeable future. A similar dichotomy was observable in gauges of manufacturing sentiment (some of which began to turn materially lower last summer as Sino-US tensions escalated) and services activity (which remained generally buoyant, come hell or high tariffs). Now, the services sector is the locus of the pain. The largest demand shock since the Great Depression is concentrated in services, where millions upon millions of Americans lost their jobs as restaurants closed, entertainment venues were shuttered and travel ground to a standstill. Those millions of newly jobless are now staring down the terrifying prospect of insolvency. “In the absence of a major disruption, the system is capable of moving alo
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9 comments on “4 Charts Reveal Extent Of Collapse In US Services Sector

  1. If one listened to Gov Cuomo when he described the Pandemic Health Care Protocols and then read them in their entirety you had to know profit was out the window.
    A large part of the consumer spending is based on young peoples lifestyles. There is a whole velocity of money that they create. How are the younger citizens going to lifestyle now?

  2. I don’t mean to be a jerk, but if you shut down hotels, restaurants, recreation, entertainment and travel, that leads to massive unemployment numbers and revenue cuts. Lavishing gallons of virtual ink on the consequences may be necessary reporting, but it shouldn’t be any surprise.

    • See where you used the word “necessary” there, Paul? That’s kinda the key here. What do you imagine readers would think if they came to the site on Wednesday and there was no mention of GDP or the granular breakdown? This is a site dedicated to economics, politics, and markets. Hence, you can expect to see all of those topics discussed, all day, every day.

      • I would have absolutely loved to have seen your analysis of many of the Coronavirus Task Force briefings, which I always watched for the comedic value. It’s a shame you were too busy parsing the abundance of unbelievable financial news to allocate much time to those…it would have made them at least twice as much fun!

  3. I do not know the size of this portion of the economy, but services purchased for cash – which were probably, at least partially, unreported income ( house cleaning, yard work, dog walking, nail salons, child care, a portion of “tips”, home repairs/maintenance, etc. ) have been decimated.

    • Interesting question –how big is the informal economy and how much impact will it have upon actual consumption –not just house cleaning, home improvement paid in cash etc. . .but drug dealing, illicit gambling, the sex trade –does anyone have any idea what the impact upon the opioid market will be? Also wonder what impact new virus rules will have upon social service productivity –raising productivity in a service based economy is challenging and now would seem to have become more so. Even if every service provider were to return to work tomorrow would each and every be able to perform as much service as before? Seems unlikely

  4. Who cares??? Google is cutting back on capex and boosting their share buy-back program! New highs by June 1st, at the latest!!!

  5. On the one hand, non-critical healthcare will eventually resume. On the other hand, there’s going to be a lot more people without any kind of health insurance.

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