The five cities in The Investopedia City Economic Recovery Tracker (CERT) continued to have mixed economic recoveries during the week of Jan. 2. New York, Chicago, and Columbus all saw gains in economic activity, while Los Angeles and Houston had small declines. Outdoor dining restrictions in Los Angeles continued to hold back the city’s economic recovery, while the high number of COVID-19 cases also presented reason for concern, especially since ICU capacity in the city is dangerously high.
Despite its weekly overall decline of two points, Houston is still experiencing the strongest recovery with a score of 63. New York saw the greatest overall weekly change with an increase of eight points, joining Houston and Columbus as the three cities where the economic recovery is at least halfway back to early March 2020 levels. Meanwhile, Los Angeles remains at the bottom of the cities in our index, and fell further with a two-point decline and score of 37.
LA Still Faces Worse COVID-19 Case Rate
The COVID-19 case rates among the five cities have been mixed, with cases falling in Columbus and Chicago, and rising in Los Angeles, Houston, and New York. Los Angeles continued to see its case rate grow exponentially and had an average of 142 new cases per 100,000 people during the week of Jan. 2, which is more than double the rate of the next-highest city of Columbus. Los Angeles County reported 959,000 COVID-19 cases and 12,955 deaths as of Jan. 14. Many medical facilities in the city are overwhelmed, with one hospital’s intensive care unit at 320% occupancy.
Both Columbus and Chicago’s case rates have declined from earlier highs, though Columbus’ rate is still just below New York’s April peak of 65. Regardless, the speed at which Chicago and Columbus were able to reverse their growing case rates provides a hope that Los Angeles might be able to do the same in the coming weeks.
Vaccine distribution is well underway and approximately 10.3 million people in the U.S. have received the Covid-19 vaccine as of Jan. 14, according to the CDC. Johnson & Johnson said its single-dose COVID-19 vaccine candidate induced an immune response and was generally well-tolerated across all study participants in early Phase 1/2a trials. The company plans to release Phase 3 data this month and hopes to get FDA approval for emergency use by March, which would make it the third approved vaccine in the U.S. after the ones made by Moderna and Pfizer.
Unemployment Claims Dip for Chicago, New York
The rate of initial unemployment claims varied between the cities. The rates for Columbus, Houston, and Los Angeles remained relatively flat and are still between 2.5 and 3.5 times higher than the same period last year. Meanwhile, the rates for New York and Chicago dropped significantly. For New York, in particular, the decline was not a result of less people filing initial claims during the week of Jan. 2, but rather an unusually high number of claims filed during the same period last year.
Chicago continued to see a nearly month-long decline in unemployment claims and, for the first time in months, is not the city with the highest unemployment rate.
The number of unemployment claims nationwide has increased during the week of Jan 9. to 965,000, up 181,000 from the previous week and exceeding analyst’s expectations. President-elect Joe Biden released his economic plan today, which includes a $1.9 trillion COVID-19 relief package that will provide Americans with $1,400 stimulus checks. The economic recovery has been uneven in the U.S., with lower wage earners struggling more than higher income workers. Unemployment for workers in the bottom wage quartile in the U.S. is likely above 20%, while the rate has fallen below 5% for the nation’s highest-paid workers, Federal Reserve Governor Lael Brainard said.
Dining Restriction Continues to Hurt LA
Los Angeles’ outdoor dining ban continues to keep the city’s restaurant index at zero, while the other cities see gains in the number of restaurant reservations made during the week of Jan. 2. New York, though it has a similar ban on indoor dining, was able to see modest gains week-over-week.
Chicago and Columbus saw significant bumps in the number of reservations made week-over-week, and are the only two cities more than halfway back to early March 2020 levels.
The restaurant industry continues to struggle across the country as colder weather and rising COVID-19 rates deter patrons. During the month of December, the steepest job losses in the U.S. were in the leisure and hospitality sector, where 498,000 jobs were lost with three-quarters of those losses coming from restaurants and bars.
Transit Scores Drop
Transit numbers were slightly down week-over-week in every city for the week ending Jan. 2, erasing the gains of the previous week. Columbus and Houston sit at the top of the leaderboard with index scores of 66 and 61, respectively, and are doing markedly better than Los Angeles, New York, and Chicago, which are only halfway to recovery.
The federal government has set aside funds to aid cities with their transit systems and the latest stimulus package dedicated $14 billion for struggling transit agencies nationwide.
Small Businesses Index Declines
The small business index remains a bright spot for each of the five cities, though each city saw a drop in its score during the week of Jan. 2. Columbus has the smallest decline of two points, while the other cities saw decreases of between six and 10 points each. Los Angeles has a score of 72, while New York and Chicago sit at the bottom of the leaderboard with scores of 66.
The Federal Reserve released its beige book on Jan. 13, saying businesses across the country continue to suffer due to the impact of the pandemic. "Although the prospect of COVID-19 vaccines has bolstered business optimism for 2021 growth,” said the Fed report, “this has been tempered by concern over the recent virus resurgence and the implications for near-term business conditions."
Data by Amanda Morelli/Adrian Nesta. Additional reporting by Elana Dure.