Covid-19 index: when might life return to ‘normal’? - June 2021
Insights

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

As the US continues its Covid-19 vaccination program, 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 May update, the Return to Normal Index has climbed further to 76%, with gains across all index components. The pace of lifting restrictions has accelerated, and with the CDC (Centers for Disease Control and Prevention) guidance that masks will no longer be required for fully vaccinated individuals in most settings, we now expect the US could reach the normal range by August or even sooner. Outside the US, vaccine supply constraints persist, and we expect this to be the case through the end of the year in some regions.
Activity numbers won’t 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

June 76 percent of normal range

Source: Columbia Threadneedle Investments, 1 June 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

Return to school travel entertainment workplace
Our index suggests we are still 24% below pre-Covid activity levels. The levels of component activity vary: the return to brick-and-mortar stores is 17% below its pre-Covid level and a normal work routine is 20% below. The subcomponent with the lowest level is travel/entertainment: 36% 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 June 2021: 76%

Normal range estimated path of base case downside

Source: Columbia Threadneedle Investments, 1 June 2021

This 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 can help inform investors’ asset allocation decisions and set expectations on market activity.
2 June 2021
Paul DiGiacomo
Paul DiGiacomo
Head of Equity Research
Share article
Share on linkedin
Share on email
Key topics
Related topics
Listen on Stitcher badge
Share article
Share on linkedin
Share on email
Key topics
Related topics

PDF

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

21 May 2024

Pauline Grange

Portfolio Manager, Global Equities

Water in crisis – searching for solutions

With too much, too little or too toxic water the world is facing a water crisis. We explore key issues and challenges before highlighting some of the companies promoting better water management.
Read time - 3 min
16 May 2024

Paul Doyle

Head of Europe ex-UK Equities

Positives for Europe, but the Middle East could be a headache

Inflation is a stubborn problem in the US due to labour shortages, but this is much less of a factor in Europe where activity is dull but likely to recover as the consumer is well supported.
Read time - 1 min
17 April 2024

In search of sustainability – following Highway 101

Travelling down the US west coast we met 25 companies in five days. Learn more about the tech and healthcare businesses shaping our future.
Read time - 3 min
14 June 2024

Gene Tannuzzo

Global Head of Fixed Income

Fixed-income outlook: Shifting opportunities for bond investors

In an environment of tighter credit spreads, investors will have to look closely to find relative value.
Read time - 1 min
14 June 2024

Natalia Luna

Senior Thematic Investment Analyst, Global Research

US elections: the Inflation Reduction Act and the risk of repeal

A full reversal is considered unlikely, but we believe the possibility of a partial repeal, which could see tax credits and funding programmes weakened, is underappreciated. Here is how Columbia Threadneedle will assess this risk and the potential implications for the most exposed sectors.
Read time - 3 min
11 June 2024

Fixed Income Desk

In Credit - Weekly Snapshot

In Credit Weekly Snapshot – June 2024

Our fixed income team provide their weekly snapshot of market events.
Read time - 5 min
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.