Progress In Reopening The Economy

In this video commentary, Tony Ogorek and Jeff Viksjo take a look at how inflation has helped with reopening the economy post-COVID.


Recorded: 5/18/21





Hi I’m Tony Ogorek, I’m the Founder and President of Ogorek Wealth, and Jeff is our Portfolio Manager.  Today we are going to be taking a look at a hot topic, which is inflation.


Why are we talking about inflation? It’s because some good things are happening.  People are vaccinated, the virus counts are going down, and we’re starting to re-open the economy.  This chart just shows where our progress is at right now.  The yellow line essentially shows you how far these things fell at their worst last year, and the grey is where we are today.  So, starting with purchase mortgage applications, those fell 35% at the worst of the crisis.  Today they’re 6% above where they were before covid.  Consumer debit transactions fell 34% at one point, now they’re 13% higher than where they were before covid. Hotel occupancy fell 70% at its worse, now it’s within just 15% of getting all the way back.  Travel and navigation app usage, the people using google maps, it fell 82% because no one was going anywhere, today it’s within 16% of reaching back to where it was pre-covid.  U.S. seated diners, the number of people in restaurants, it fell 100%, and we know why because we couldn’t go out to restaurants, now it’s down only about 25% from where it was pre-covid. And then finally, TSA traffic fell 96% at the worst, it’s still down 40%.


Right, so I think what this points out is that the economy is a complex beast.  You are not going to throw a switch and have it all come back.  It makes sense that the purchase mortgage applications are up because rates are so low and a lot of people are in the market to buy.  Same thing with the consumer debit credit transactions.  Covid has really pushed forward, by a few years, the adoption of online purchasing.  Now, the other areas are going to take a while to come back, but I think it’s interesting to understand that what we’re seeing with a lot of supply chain disruption right now, is what I call the ‘toilet paper effect’.  You know any time you hear there is going to be a hurricane, some other kind of disruption in the economy, people run out and they just clean out the toilet paper, the milk, the bread, the staples in the super markets. We’re having the same kind of effect, believe it or not, at the corporate level because they’re all tending to hoard commodities, varieties of other materials, because of the expectation that demand is going to stay at this enhanced level for a sustained period of time.  We really don’t see that happening, but they’re acting the same way people do when they’re in sort of a panic.