Real-Time Real Economic Activity: Entering and Exiting the Pandemic Recession of 2020

TL;DR

This paper analyzes high-frequency real activity signals during the 2020 pandemic recession using the ADS Index, revealing rapid shifts, correlations with COVID-19 cases, and comparisons to previous recession signals.

Contribution

It introduces a real-time analysis of economic activity during the pandemic, comparing it to later data and past recession signals, highlighting the index's responsiveness.

Findings

ADS index rapidly reflected economic swings during the pandemic

Strong correlation between real activity and COVID-19 cases

Real-time signals converged to positive growth by mid-May

Abstract

Entering and exiting the Pandemic Recession, I study the high-frequency real-activity signals provided by a leading nowcast, the ADS Index of Business Conditions produced and released in real time by the Federal Reserve Bank of Philadelphia. I track the evolution of real-time vintage beliefs and compare them to a later-vintage chronology. Real-time ADS plunges and then swings as its underlying economic indicators swing, but the ADS paths quickly converge to indicate a return to brisk positive growth by mid-May. I show, moreover, that the daily real activity path was highly correlated with the daily COVID-19 cases. Finally, I provide a comparative assessment of the real-time ADS signals provided when exiting the Great Recession.