By Michael S. Derby 

The first wave of data capturing the front end of the new coronavirus crisis is dribbling in, and regional Federal Reserve Banks are tallying up the ugly picture.

On Monday, the New York Fed launched a "Weekly Economic Index" aimed at capturing where the economy is in near real time, and extrapolated historical levels based on past data. In its first outing, the index showed "developments in the past week saw the index fall to a level unseen since 2008," during the heat of the financial crisis.

The report's authors note that their index seeks to show what a given quarter's activity would look like if it persisted for a year. The index, which had been indicating economic growth on either side of 3% since about 2017, plunged in nearly a straight line and now reflects a contraction of about 3.97%.

A separate report from the San Francisco Fed warned uncertainty generated by the crisis could wash away already modest inflation impulses in the economy. This uncertainty may "lead to a persistent increase in the unemployment rate of roughly 1 percentage point, while simultaneously reducing the inflation rate by as much as 2 percentage points and bringing the interest rate close to its zero lower bound."

The San Francisco Fed report warns its current findings "will surely understate the overall impact of the current pandemic" because new negative effects are still playing out, leading it to say "the pandemic is likely to weigh on the economy persistently, depressing economic activity and inflation well beyond the near term."

The New York Fed index's authors said their new weekly index is based on a mix of job, consumer-confidence, steel-production, energy-use and electric-utility data.

"In normal times, familiar macroeconomic aggregates provide accurate descriptions of economic conditions with a modest delay," the authors wrote. "But, in a tumultuous setting, when conditions evolve rapidly from day to day and week to week, less familiar sources of data can provide an informative signal of the state of the economy."

There are plenty other public and privately produced real-time growth trackers. The New York and Atlanta Feds make them, for example, but their construction has yet to lead them to capture how the coronavirus crisis and its virtual shutdown of the swaths of the U.S. and global economy will hit growth.

The Atlanta Fed's closely watched GDPNow growth tracker is pointing to a 2.7% gross-domestic-product gain in the first quarter, but the bank says on its website to disregard that estimate due to the coronavirus crisis. Meanwhile, IHS Markit's first-quarter estimate indicates a 2.1% decline in first-quarter GDP.

Most private-sector forecasters see a massive hit to growth. While the Fed has no official forecasts and bypassed creating one at the its most recent Federal Open Market Committee meeting citing uncertainty and rapidly moving events, St. Louis Fed leader James Bullard has suggested that half of production might need to be shelved during the second quarter.

The Dallas Fed also reported ominous factory data for March for manufacturers in its district.

The bank asked factory operators a series of special questions about the crisis. Some 83.5% said the coronavirus situation had increased uncertainty, 61.0% said it was affecting supply chains, 76.7% said it was hurting production and sales and 34.3% said it was negatively influencing their worker head counts.

Firms also reported a modest deflationary bias to prices from the trouble, although most see no change so far. Four hundred firms were surveyed by the Dallas Fed in mid-March.

Write to Michael S. Derby at


(END) Dow Jones Newswires

March 30, 2020 14:11 ET (18:11 GMT)

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