U.S. economy might be sinking at a slower pace, new Fed tracker hints

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The sharp deterioration in the economy might — might — be starting to bottom out.

A weekly tracker that monitors the economy’s health showed the U.S. is still suffering its worst crisis since the Great Depression, but the contraction in growth has slowed.

The New York Federal Reserve’s weekly economic index, created in response to the COVID-19 pandemic, suggests the economy was shrinking at an 11% pace compared to the prior year.

A week earlier, the index showed the economy contracting at a 10.6% rate.

The New York Fed index is composed of 10 indicators, including jobless claims, retail sales, temporary employment data, electricity output, raw steel production and estimates of fuel sales.

Read:Restaurants and hotels, devastated by coronavirus, face long and painful recovery

By contrast, the Fed index pointed to a year-over-year growth rate of 1.6% at the end of February, before the coronavirus epidemic shut down large swaths of the U.S. economy.

To be sure, the economy has been devastated by widespread business closures and the loss of more than 20 million jobs. The second quarter is shaping up to record the biggest decline in gross domestic product at least since World War Two and perhaps ever (quarterly records don’t exist before 1947).

Read:Coronavirus erases almost all the 23 million new jobs created since Great Recession

Also: The soaring U.S. unemployment rate could approach Great Depression-era levels

Leading forecaster IHS on Tuesday said the U.S. is on track to contract by an astonishing 27% annual clip from April to June. Such a precipitous decline would be almost three times larger than anything the U.S. economy has ever experienced.

Still, the New York Fed index offers a hint that the pace of economic contraction is slowing.

Congress has rushed trillions of dollars to aid businesses, consumers and households and more emergency funds are on the way. Some states are also taking the first, halting steps to try to open businesses again.

Whether economic growth really does find a bottom soon will depend on how fast the spread of the coronavirus epidemic slows, treatments are developed, and American consumers begin to regain confidence. Those are big uncertainties.