Upwardly mobile?

Posted by: Paul Donovan

10 Jul 2020

Weekly Update

  • Google's mobility data has been seized upon by investors. It signals how people are physically reacting to easing or tightening of lockdown policies. How should we interpret the impact of mobility on economies?
  • Mobility data should not be compared between countries. Countries have different levels of home working and online retail sales. A more virtual economy reduces mobility, but not economic activity. Germany probably needs more mobility than the UK to achieve the same economic activity.
  • The mobility-economic growth relationship depends on where a country is in the lockdown cycle. Three things help measure consumer spending as lockdowns ease: how many people are travelling to shops (mobility); how much people spend in the shops each trip; how much people spend online.
  • In the early stage of lockdown easing (e.g. the US at the moment), mobility is likely to be strongly correlated with fear of the virus. Fear will drive how much money people want to spend. Thus mobility is a good signal for economic activity.
  • After the first stage of easing restrictions, mobility tells us less about the economy. Mobility will probably stabilise below pre-virus levels. Economic growth will then be dependent on people spending more each trip, which will depend on factors other than the virus.

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