WASHINGTON (CNN) - The U.S. economy has come a long way since last year’s devastating downturn. But a return to “normal” may not be possible.
The Back-to-Normal Index created by CNN Business and Moody’s Analytics stands at 93% as of June 18, a new pandemic-era high.
The index is comprised of 37 national and seven state-level indicators that track metrics such as consumer credit, unemployment claims, job postings, domestic air travel and hotel occupancy.
The latest reading shows that America is inching closer to “normalcy,” but the last mile will be tough. Although various states have done away with pandemic-era restrictions, life as it used to be hasn’t fully resumed.
In fact, the pandemic may have changed some fundamentals of the economy in ways that mean it’s never going back to “normal.”
For example, many people are still working from home and might continue to do so indefinitely. While some companies are ordering their staff to return to the office, others are adjusting to a new normal of more remote work and a more geographically diverse workforce.
Travel is another component of the Back-to-Normal Index that might be changed forever. People are excited to vacation again as vaccination rates rise across the United States and countries around the world reopen for tourists, but business travel might not resume in the same way.
After more than a year of making due with virtual meetings, companies might be less inclined to fly staff around the world. Moody’s Analytics doesn’t believe business travel will come back to its pre-pandemic level any time soon, which will in turn affect plane travel and the demand for oil as well.
“We’re tracking the return to something we might not get back to,” Matt Colyar, associate economist at Moody’s Analytics, told CNN Business.
Claims for unemployment benefits are still about double what was considered normal before Covid. They “are still sky high and they have to come down,” Colyar said.
States that were hit particularly hard by the pandemic — such as economic powerhouse New York — still have much more room to improve compared to other parts of the country. They will likely remain a drag on the index.
That doesn’t mean the U.S. economy won’t regain its pre-pandemic size and strength. In fact, the speed of the rebound is without modern precedent. But we’re heading for a new kind of “normal.”
For the Back-to-Normal Index to hit 100%, some components will need to make up even more ground while others lag.
The features and characteristics of this new economy have major implications for investors. Figure out the growth areas, and you can identify the companies most likely to benefit.