Insights

Covid-19 index: when might life return to ‘normal’? – March 2021

As one of the world’s largest economies the US is a key focus for investors. With every country attempting to return to normality following the coronavirus pandemic, we are monitoring when US economic activity might get back on track, as well as other measures of “normality” such as entertainment and leisure, high street shopping, and schools reopening. The result is an index that measures progress toward a post-pandemic world.

Our Return to Normal index

With the US Covid-19 vaccination program well underway, the Return to Normal Index measures human activity data relative to pre-pandemic levels. The index is constructed by our data scientists and fundamental analysts and tracks activities in the US, including travel, returning to work and school, brick-and-mortar shopping and eating out. By design, the index is focused on measuring components of daily life rather than economic indicators such as GDP growth. The percentage level will move closer to 100 as daily life normalises, and our analysts will update it on a regular basis.

What has changed?

Since our February update, the Return to Normal Index has ticked up only slightly (Figure 1). This is not surprising: large segments of the population are still not eligible to get a vaccination. But the good news is that Covid cases, hospitalisations and positivity rates continue to fall precipitously, and vaccine distribution is accelerating. Among the index subcomponents (explained below), return to in-person schooling is rising because many counties are moving away from remote learning and back to school attendance or hybrid models.

Activity numbers won’t necessarily all return to where they were before Covid. The index could hit “normal” at a point lower than the 100 level due to continued changes in behaviour, like working from home and reduced business travel. The definition of the future normal is evolving, and the index’s normal threshold will reflect our data science and fundamental research insights.

Figure 1: The Return to Normal Index tracks activity compared with pre-pandemic levels as we progress to post-Covid life

March 1 60 procents of normal range

Source: Columbia Threadneedle Investments, 1 March 2021

What are we monitoring, and where is it at?

We are analysing the time people spend engaging in a broad set of activities outside their homes (Figure 2). The index components have implications for economic growth, but the primary objective is to monitor how close or far we are to returning to normal life.

Figure 2: Tracking inputs

Graph Index Normal life

Our index suggests we are still 40% below pre-Covid activity levels. The levels of subcomponent activity vary: the return to brick-and-mortar stores is 31% below its pre-Covid levels, while a normal work routine is 32% below pre-Covid levels. The subcomponent with the lowest level is travel/entertainment, which is 61% below pre-Covid levels.

What could drive change?

Faster vaccine distribution and uptake could accelerate the path to normal (ie, the upside case). Developments that could impede a return to normal (ie, the downside case) include the emergence of variants that are resistant to current vaccines or slower uptake of the vaccine in certain places (because of people’s unwillingness to get vaccinated or shortfalls in supply).

Figure 3: The Return to Normal Index over time – level as of 1 March: 60%

Normal range and estimated path across the years graph

Source: Columbia Threadneedle Investments, 1 March 2021

The index provides a framework as we analyse companies. It is a roadmap for what normal activity might look like after Covid and how long it will take to get there. The information allows us to test a company’s own assumptions and make adjustments in our views as needed.

For investors, the Columbia Threadneedle Return to Normal Index can act the same way: it’s an additional input to consider as they research their individual asset allocation and portfolio decisions.

Understanding where we are on the path to normal life will be a critical question in 2021. This data input can help inform investors’ asset allocation decisions and set expectations on market activity.

10 March 2021
Paul DiGiacomo
Paul DiGiacomo
Head of Equity Research
Share article
Key topics
Related topics
Listen on Stitcher badge
Share article
Key topics
Related topics

PDF

Covid-19 index: when might life return to ‘normal’? – March 2021

Important Information

The research and analysis included on this website has been produced by Columbia Threadneedle Investments for its own investment management activities, may have been acted upon prior to publication and is made available here incidentally. Any opinions expressed are made as at the date of publication but are subject to change without notice and should not be seen as investment advice. Information obtained from external sources is believed to be reliable but its accuracy or completeness cannot be guaranteed.

Related Insights

19 November 2024

Melda Mergen

Global Head of Equities

2025 Equity Outlook: Will lower rates and strong earnings be enough to keep markets up?

Going into 2025, strong company fundamentals and trends in innovation could be outweighed by increased geopolitical risk and policy uncertainty.
11 November 2024

Paul Doyle

Head of Europe ex-UK Equities

European reform must wait as the US continues to advance

The continent is struggling with competitiveness and needs to cut interest rates faster – but even that may not be enough.
5 November 2024

Scott Woods

Portfolio Manager, Global Equities

WD-40, the graveyard cabinet and a hunt for special smaller companies

I spend about nine weeks a year in a rental car looking for companies all over the world, discovering their products, operations and customers. Here's what I'm looking for.
26 November 2024

Fixed Income Desk

In Credit - Weekly Snapshot

In Credit Weekly Snapshot – November 2024

Our fixed income team provide their weekly snapshot of market events.
25 November 2024

Steven Bell

Chief Economist, EMEA

Is the UK heading into recession?

In the run up to July’s general election, the UK economy looked in good shape. But now things look different.
21 November 2024

William Davies

Global Chief Investment Officer

2025 Macro Outlook: Slower growth amid geopolitical uncertainty, but opportunities remain

Headwinds are blowing but conditions are supportive, so we see both risks and opportunities in 2025.
true
true

Important Information

The research and analysis included on this website has been produced by Columbia Threadneedle Investments for its own investment management activities, may have been acted upon prior to publication and is made available here incidentally. Any opinions expressed are made as at the date of publication but are subject to change without notice and should not be seen as investment advice. Information obtained from external sources is believed to be reliable but its accuracy or completeness cannot be guaranteed.

You may also like

Investment approach

Teamwork defines us and is fundamental to our investment approach, which is structured to facilitate the generation, assessment and implementation of good, strong investment ideas for our portfolios.

Funds and Prices

Columbia Threadneedle Investments has a comprehensive range of investment funds catering for a broad range of objectives.

Our Capabilities

We offer a broad range of actively managed investment strategies and solutions covering global, regional and domestic markets and asset classes.

Thank you. You can now visit your preference centre to choose which insights you would like to receive by email.

To view and control which insights you receive from us by email, please visit your preference centre.

Woman listens to music through headphones
Play Video

CT Property Trust- Fund Manager Update

Sed ut perspiciatis unde omnis iste natus error sit voluptatem accusantium doloremque laudantium