The recent forecast from JPMorgan paints a troubling picture of the U.S. economy as we head into the final month of 2020. While this year will thankfully and mercifully come to a close, our financial woes will not.

“This winter will be grim, and we believe the economy will contract again in 1Q,” the company said in its analysis.

It appears the ongoing rise in coronavirus cases — and subsequent rise of state lockdowns and resurgence of self-quarantining — is likely to derail the economic momentum that’s been building in the first two months of the fourth quarter.

Some good news did emerge in 4Q, signaling that the economy was on the right track before this third wave of this pandemic started to shake us to the core. So as fears of a so-called “COVID-19 cliff” begin swirling, let’s take stock of where things stand heading into the Thanksgiving holiday.

The Good

Here’s a rundown of the upbeat economic reports from MDM during November, including both distribution-specific and overall economic markets.

• Heating, Air-conditioning & Refrigeration Distributors International (HARDI), Columbus, Ohio, released its monthly TRENDS report, showing the average sales performance by HARDI distributors was an increase of 13.9% during September. The average annual sales growth for the 12 months through September is 3.3%.
• Led by improvements in production-related indicators, the Chicago Fed National Activity Index (CFNAI) increased to +0.83 in October from +0.32 in September. Three of the four broad categories of indicators used to construct the index made positive contributions in October, and three of the four categories increased from September. The index’s three-month moving average, CFNAI-MA3, fell to +0.75 in October from +1.37 in September.
• Privately owned housing units authorized by building permits in October were at a seasonally adjusted annual rate of 1,545,000, according to the U.S. Census Bureau and the U.S. Department of Housing and Urban Development. This is virtually unchanged from the revised September rate of 1,545,000 but is 2.8% above the October 2019 rate of 1,503,000.
• The seasonally adjusted Fastener Distributor Index (FDI) for October was 56.5, up from 52 in September, according to the latest analysis from Baird, FCH Sourcing Network and the Institute for Supply Management. That marked the second consecutive month of growth.
• The combined value of distributive trade sales and manufacturers’ shipments for September, adjusted for seasonal and trading-day differences but not for price changes, was estimated at $1,465.1 billion, up 0.8% from September 2019 and up 0.6% from August, according to the U.S. Census Bureau.
• Total industrial production grew 1.1% in October, according to the Industrial Production and Capacity Utilization Report, released by the Federal Reserve. The index has recovered much of its 16.5% decline from February to April, but output in October was still 5.6% lower than its pre-pandemic February level.
• Construction spending in September was estimated at a seasonally adjusted annual rate of $1,414.0 billion, 1.5% above the September 2019 estimate of $1,393.3 billion and 0.3% above the revised August estimate of $1,410.4 billion, according to the U.S. Census Bureau. During the first nine months of 2020, construction spending amounted to $1,058.5 billion, 4.1% above the $1,016.7 billion for the same period in 2019.
• Economic activity in the manufacturing sector expanded in October, and the overall economy grew for the sixth consecutive month — after it had dipped significantly in the early stages of the coronavirus — say the nation’s supply executives in the latest Manufacturing ISM Report on Business.

The Bad

A few indices showed declines in the previous months. Here’s a sampling of reports that shows not all is going well.

• Indian River Consulting Group’s (IRCG) weekly Pandemic Revenue Index for the workweek of Nov. 9 to Nov. 13 indicated a 2.2% decrease compared with the same week a year ago.
• U.S. cutting tool consumption totaled $156.1 million in September, according to the U.S. Cutting Tool Institute (USCTI) and The Association For Manufacturing Technology (AMT). This total, as reported by companies participating in the Cutting Tool Market Report collaboration, was down 20.5% when compared with the $196.3 million reported for September 2019 but up 14.7% from August’s $136.1 million. With a year-to-date total of $1.4 billion, 2020 is down 23.1% when compared with the first nine months of 2019.
• U.S. manufacturing technology orders totaled $373.7 million, a 3.2% decrease from the same month a year ago, according to the U.S. Manufacturing Technology Orders report published by AMT – The Association For Manufacturing Technology.
• Wholesale trade declined slightly in September compared to the same month a year ago but improved slightly over August, according to the latest report from the U.S. Census Bureau. September 2020 sales of merchant wholesalers, except manufacturers’ sales branches and offices, after adjustment for seasonal variations and trading-day differences but not for price changes, were $486 billion, down 2.3% from the revised September 2019 level but up 0.1% from the revised August level. The July 2020 to August 2020 percent change was revised from the preliminary estimate of up 1.4% to up 1.2%.
• The U.S. Census Bureau and the U.S. Bureau of Economic Analysis announced that the goods and services deficit was $63.9 billion in September, down $3.2 billion from $67 billion in August, revised. September exports were $176.4 billion, $4.4 billion more than August exports. September imports were $240.2 billion, $1.2 billion more than August imports.
• Wayne, Pennsylvania-based buying group AD announced that, on a same-store basis, member sales across all AD’s divisions and countries were down 6% through the first nine months of this year, to $33 billion. By business unit, nine-month plumbing, heating, cooling and piping same-store sales were down 2%; electrical sales were down 7%; building materials sales were down 6%; and industrial and safety sales were down 9%.

The Ugly

Nothing too terrible to report, but we’re keeping an eye on how soon a coronavirus vaccine becomes widely available, the messy presidential transition, the potential for rapidly growing unemployment and whether an economic stimulus gets passed.

Read more in our latest MDM-Baird Distribution survey for the third quarter. And be on the lookout for our 2021 projections in MDM Premium, on our blog and in our Industry Outlook webcast in January.