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Oct. 23, 2020, 10:13 a.m. EDT

This may be the post-pandemic economy’s most closely watched indicator

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By William Watts

Add economic data to the list of things that won’t ever be the same after the coronavirus pandemic.

An unprecedented “sudden stop” by the global economy in the first quarter as activity ground to a near halt amid lockdowns put in place to control the spread of the virus left economic policy makers, businesses and investors virtually flying blind. Traditional economic data, including more timely series like weekly unemployment claims, offered little near-term insight into what was happening on the ground.

That’s put a spotlight on the already rapidly growing world of “alternative data.” But one category known as mobility data, particularly anonymized foot-traffic information gleaned from millions of mobile phones as well as other broader measures of individual activity, is being propelled into the mainstream and now appears likely to be among the post-pandemic economy’s most closely watched economic indicators.

“Obviously, if the economy moves from 1.2% growth to 1.3% growth, you may not be able to see that in the mobility data. But if it moves from +2% to minus 30%” it’s a different story, said Jens Nordvig, founder of Exante Data, a data-focused economics research firm. “It was incredibly useful in the middle of the crisis to literally have a real-time pulse on the economy country by country, state by state.”

Exante Data was an early adopter, using mobility-related data from a variety of sources, including Chinese social-networking company Baidu, to get a grip on the pandemic’s effect on the economy in China as it fell victim to the virus. Data from the firm was used in a widely cited Imperial College London study that tested how reopening efforts affected virus transmission rates

Investors also had reason to track the spread of the virus itself — and for that, mobility data was hard to beat, Nordvig said.

“What kind of economic data would you use to analyze how the virus gets transmitted? There’s no economic data that’s particularly good for that, but the mobile phone data is just fantastic,” said Nordvig.

“Mobility data is just literally tailored to analyze a virus,” he said.

Top-down look

Mobility data, when analyzed carefully and used alongside other data sources, is particularly well suited to measuring activity when new restrictions are imposed or relaxed, as well as around events, including demonstrations and civil unrest.

Karel Mertens is a senior economic policy adviser at the Federal Reserve Bank of Dallas. Part of a team responsible for measuring economic activity and making forecasts, Mertens and his colleagues were left scrambling as the pandemic hit.

“All the usual models and the economic statistics that we would look at were essentially almost entirely useless because they’re just way too delayed,” he said in an interview with MarketWatch.

As part of a broader effort to get a grip on what was happening on the ground, the economists turned to data provided by SafeGraph, a company that tracks raw foot-traffic data it harvests from mobile-phone apps. That data was in turn used to formulate the Dallas Fed’s popular Mobility and Engagement Index, which measures the deviation from normal mobility patterns as a result of the pandemic.

Minutes of the Federal Reserve’s July 28-29 meeting showed that policy makers pointed to high-frequency indicators, including data on credit and debit card transactions and mobility indicators based on mobile phone location tracking, that suggested consumer spending growth had slowed in reaction to further spread of the virus.

“So what we’re seeing is that we monitor quite a lot of what we think of as sort of nonstandard, high-frequency data. That’s become a very important thing, even more important than usual in the work that we do,” said Federal Reserve Chairman Jerome Powell in his July 29 news conference.

Mobility data was credited with helping to pinpoint a trough in economic activity in mid-April as traditional data continued to deteriorate.

“For example, when you look at whether it’s mobility data or other alternative sources, they pretty much all consistently told you in mid-April that the economy was inflecting and that we were bottoming,” Aneta Markowska, chief financial economist at Jefferies, told MarketWatch.

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