The index suggests that the volatility and retrenchment in the regional economy that started in November and December carried over into the first quarter of 2021. There was no clear trend in the high frequency data during the quarter but much volatility. This is perhaps reflective of periods where individuals begin to venture out and buy things locally, but then retreat to their homes when news of outbreaks emerge.
As we move into the second quarter of 2021, there appears to be more hope of reopening the economy and hope that successive rounds of federal fiscal stimulus will bode well for economic growth. Early “nowcasts” of second quarter real GDP growth appear to be in the range of 8% - 11%. Many uncertainties remain, however. Concerns over vaccine hesitancy and the transmission of SARS-CoV2 variants have kept down growth expectations. On the other side of the economic coin, some economists are expressing concern over raw materials and labor shortages, and with the prospect of higher inflation in the near-to-medium term due to the unprecedented amount of financial liquidity provided by the Federal Reserve and the simultaneous infusion of large amounts of cash to the economy from expansionary fiscal policy. So once again, the economy faces a significant “wall of worry” to climb.