With vaccinations on the rise, U.S. economy remains in the waiting room

U.S. policymakers are touting the gradual rise in the number of people who have received a coronavirus vaccination as the beginning of the end of the economy’s fight with the pandemic, but real-time data suggests the awaited rebound is still at the starting line.

The worst of the economic pain triggered by the virus may well have passed. Since the current surge in infections began last fall, measures of hiring at small businesses and workplaces across a variety of industries have remained depressed. They have stopped falling, however.

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Daily data on restaurant seatings from OpenTable here and on airline passengers screened by the Transportation Security Administration have leveled off recently at about 40% below year-ago levels.

Weekly filings for unemployment insurance still show the deep dislocation felt by workers in an economy roughly 9 million jobs short of where it was a year ago. The Labor Department reported on Thursday that 847,000 people filed new unemployment insurance claims for the week ending Jan. 23. The number collecting unemployment insurance benefits from the patchwork of state and emergency federal programs jumped by more than 2.2 million to 18.2 million in the week ending Jan. 9.

But even that bit of data held promise. The rise in the number of people collecting payments was driven by the use of pandemic emergency programs recently extended by Congress, meaning workers who might otherwise have been left without help were getting a renewed lifeline.

“It is as if the fire department is arriving just as the fire really gets going … and it may have maximum impact,” as that money will likely be spent quickly, said Nathan Sheets, chief economist at PGIM Fixed Income.

The combination of those renewed benefits beginning to flow to the unemployed, one-time checks going out to most U.S. residents, and a bulge of savings already tucked away by households could make for a potent rebound once the effects of the vaccine are more broadly felt, said Gregory Daco, chief U.S. economist at Oxford here Economics.