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Post July PCI 7-14-21

July 15, 2021

New Post-Covid Indicator Values Predict Summer Goods Demand


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Covid-19 triggered a boom in goods demand, but how long will it last? We examine 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 forecasts that the US Personal Consumption Expenditures (PCE) goods share will be 125 in June and 113 in July.
  • Last month’s Flexport Post-Covid Indicator was right on direction. We predicted a modest decrease in goods demand from April levels.

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 July report? All yours.

The latest Flexport data shows the goods craze in US consumption backing off from the fevered pitch of March and April, but remaining above the elevated levels of summer 2020 through June and July of this year.

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The chart tracks the share of PCE spent on goods vs. services in green. The Flexport Post-Covid Indicator, in red, is scaled so that the old average is 0 and the summer 2020 average is 100. The chart shows the latest revised data for both the BEA and Flexport.

Looking ahead, the Flexport Post-Covid Indicator forecasts that PCE goods share will be 125 in June and 113 in July.

For the four years preceding the Covid economic shock, the PCE goods share averaged 31.2%, with very little variation. From June to September 2020, it leapt up to a stable average of 39.5% Then, it dipped in late 2020, soared to 166 in March, 161 in April, and back down to 143 in May.

So, how did the Flexport Post-Covid Indicator do with its May forecast? Directionally, it was right. We forecast a modest decrease from April levels.

In the May release, subsequent to the Flexport forecast, the Bureau of Economic Analysis substantially increased its estimate of the goods share for April, from 145 to 161—and there was indeed a decrease to May.

Stay tuned for the next Flexport Post-Covid Indicator in August or email Phil Levy, Flexport Chief Economist, with questions about this one.

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