Signal From Static: Is COVID-19 Over?

Signal From Static: Is COVID-19 Over?

November 14, 2022

Flu season is upon us, and a surge in cases of respiratory syncytial virus (RSV) has made headlines as hospitals warn of this new source of overcrowding. Maybe you’re thinking that the COVID-19 pandemic is over and done?

I don’t think so, though it does feel like the worst is past. I remember the otherworldliness of walking through my Brooklyn neighborhood in 2020, seeing restaurants and retailers shuttered and the few people on the street fully masked and wary of anyone even remotely close to their personal spaces. The global economy locked down, and as we sheltered at home we were bombarded with some shocking and unprecedented statistics that our analysts here at Adviser monitored as they tracked the impact of the shutdown.

Revisiting those same stats today, a totally different picture emerges.

For instance, when’s the last time someone bemoaned the state of the restaurant industry and the lack of diners returning to their favorite haunts? The daily data gleaned from reservation app OpenTable has moved decidedly toward pre-pandemic levels, sometimes showing as much as 20% above 2019 numbers.

Chart shows restaurant seatings in the U.S. compared to their levels at the same time in 2019 on a daily basis from 3/1/20 through 11/6/22. Source: OpenTable.
Note: Chart shows restaurant seatings in the U.S. compared to their levels at the same time in 2019 on a daily basis from 3/1/20 through 11/6/22. Source: OpenTable.

Ditto the Transportation Security Administration (TSA) data on airline passengers. Security pass-throughs have increased steadily over the past several months. While not consistently at pre-pandemic numbers, the levels are very close, with holiday weekends seeing more flyers than in 2019.

Chart shows Transportation Security Administration (TSA) seven-day average passenger throughput compared to the same period in 2019 on a daily basis from 1/6/20 through 11/7/22. Source: TSA.
Note: Chart shows Transportation Security Administration (TSA) seven-day average passenger throughput compared to the same period in 2019 on a daily basis from 1/6/20 through 11/7/22. Source: TSA.

And remember the concern over rising lumber prices and its impact on the housing market? You might be surprised to learn that the price for 1,000 board feet of construction lumber (the standard benchmark) has fallen 75% from its May 2021 peak and is currently running more than 20% below its five-year average. Yes, the housing market may be slumping right now, but blame it on mortgage rates, not the cost of framing materials.

Chart shows price per board-foot of lumber along with the rolling five-year average on a daily basis from 12/31/19 through 11/9/22. Source: NASDAQ.
Note: Chart shows price per board-foot of lumber along with the rolling five-year average on a daily basis from 12/31/19 through 11/9/22. Source: NASDAQ.

It’s not just the markets where COVID-19 concerns are lessening. Last month, the Centers for Disease Control and Prevention (CDC) moved from daily to weekly reporting of nationwide cases, a change that went almost unnoticed and certainly unremarked upon by Wall Street’s pundits.

Chart shows millions of COVID-19 cases in the U.S. on a weekly basis from 1/29/20 through 11/2/22. Source: Centers for Disease Control and Prevention.
Note: Chart shows millions of COVID-19 cases in the U.S. on a weekly basis from 1/29/20 through 11/2/22. Source: Centers for Disease Control and Prevention.

While still potentially deadly, and still rampant in some communities (the Antarctic’s McMurdo Station just instituted a two-week travel ban after an outbreak in its desolate surroundings), COVID-19 may be moving into “flu” territory in terms of day-to-day worry and danger. The CDC’s changes mimic its influenza reporting, by the way.

I could go on, but while COVID-19 may not be gone and forgotten, it has faded into the background. The metrics with which investors were bombarded over the past few years have lost much of their resonance.

The contrast between the anxieties of 2020/2021 and 2022’s return to something approaching normal is something I keep in mind when it comes to the worries plaguing today’s investment markets: Higher interest rates, inflation, and the stock and bond bear markets.

Whether it is months or years from now, there will come a time when 4% yields on bonds, 2.5% yields on money market accounts, inflation at, say, 3% or 4%, and rebounding stock and bond prices will seem the norm and today’s concerns will be relegated to those who continue living in the past rather than the future.

We may consider inoculating our portfolios a little differently based on this recent downturn. Greater diversification, lower costs, maybe a few “alternative” investments with low correlations to the stock and bond markets? Those are all possibilities but not necessities.

It’s said that hindsight is 20/20. My clear-eyed view of past bear markets and economic uncertainties suggests that the period we are in today, despite what seem to be numerous insurmountable worries, will pass, as did the worst of the COVID-19 lockdowns. Patience and a sound long-term financial plan are the keys to surviving and thriving in the months ahead.


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