The first quarter of 2020 is a tale of two U.S. economies – one that was solidly grounded in January and another that found itself tipped upside down by the end of March.

While the Q1/20 Citizens Business Conditions Index showed only a slight decline (from 61.0 to 60.8) because the full economic impact of the COVID-19 pandemic emerged late in the quarter, even that modest directional shift from past quarters refleceds the gathering storm of the pandemic disruption.

“The U.S. economy was off to a strong start this decade and then the coronavirus spread globally and completely threw everything off track,” said Tony Bedikian, head of Global Markets for Citizens Commercial Banking. “Some sectors are doing better than others. Some have completely ground to a halt. The bull market went into a tailspin, though the government has stepped up to backstop the economy. The changes have been dramatic and more sudden than most of us have experienced in our lifetime.”

The Index is derived from several underlying components, most of which declined during the first quarter.

• The Manufacturing Purchasing Managers’ Index (PMI) from the Institute of Supply Management (ISM) was up due to increased certainty over U.S. trade with China and Brexit, but the ISM Non-Manufacturing PMI declined.
• Unemployment increased during the first quarter and wage growth stalled as the pandemic put the brakes on growth in several sectors.
• Proprietary measures of business activity among Citizens Commercial Banking’s more than 7,000 clients across the United States moderated as some sectors were hit harder than others.

The Q2 Index will more fully reflect the economic impacts of the COVID-19 pandemic and early indications signal a significant downward move unless the current situation changes dramatically before quarter end.

The Index draws from public information and proprietary corporate data to establish a unique view of business conditions across the country. An index greater than 50 indicates an expansionary trend and points to improved business growth for the next quarter.