September 23, 2021
New Post-Covid Indicator Shows Q4 Goods Demand Starts Strong
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Covid-19 triggered a boom in goods demand, but how long will it last? We analyze exclusive shipping data to peek into the future. Consult the new, monthly Flexport Post-Covid Indicator to see how demand could shift in the coming months.
The Methodology: The Flexport Post-Covid Indicator is based on an analysis of correlations between detailed shipping data and national consumption behavior. As one would expect, given how goods move, the closest correlations are between shipping flows in a month and consumption a bit later. Using the estimated model, we are able to look at more recent shipping data and forecast the consumption patterns that are likely to follow.
- The Flexport Post-Covid Indicator will be 128 in October.
- We see the goods preference holding moderately steady in the 120s: 126 in August and 128 in September. This is down from July at 134.
We’ll continue to explore potential scenarios, derived from data and updated regularly, to help prepare your company for what’s ahead. Want the official September report? All yours.
How long will the US public’s elevated preference for goods last? At least through October, according to the latest Flexport data.
The chart tracks the share of US Personal Consumption Expenditures (PCE) spent on goods vs. services. For the four years preceding the Covid economic shock, the goods share averaged 31.2%, with very little variation. Then, it leapt up to a stable average of roughly 34% from June through October of 2020. The Flexport Post-Covid Indicator is scaled so that the old average is 0 and the Summer 2020 average is 100.
The BEA release of July data at the end of August showed a tilt toward goods that was less extreme than we had seen in the Spring. The 118 figure was the lowest since February and lower than we predicted, though it still exceeded the high goods preference of the summer before. It is right in line with the average for the last 12 months (117). We revised our model accordingly and incorporated shipping data from August.
From a July PCI value of 134, we now see the goods preference holding moderately steady in the 120s: 126 in August, 128 in September, and 128 in October.
It is worth remembering that the elevated pressure on global supply chains is the result of two factors in combination: strong incomes and a preference for goods in consumption. PCI tracks the latter. The forecast for continued strong goods preference means that, barring an income shock, the pressure on supply chains will continue as we head toward Q4.
Stay tuned for the next Flexport Post-Covid Indicator in October and email email@example.com with questions.