How Close Is the Economy to Getting Back to Normal? Here's What 1 Key Index Says

Here's an overview of the progress the U.S. economy has made.

When the coronavirus pandemic first hit the U.S., millions of jobs were shed overnight. And in April of 2020, the national unemployment rate reached a record high.

But things have gotten better over the course of the past 16 months. In June, the U.S. jobless rate came in at 5.9%, which was actually a small uptick from May. Economists, however, weren't concerned because the economy also managed to add a good 850,000 jobs that month.

In fact, in recent weeks, new jobless claims have been coming in lower. And there are other signs pointing to an economic recovery as well.

For one thing, the percentage of mortgages in forbearance has been declining. That tells us that more homeowners are managing to cover their mortgages again after having put those payments on pause.

Meanwhile, the cost of common goods, from groceries to gasoline, has been rising steadily. And while it's easy to argue that inflation isn't a good thing, since it makes everyday purchases cost more, a big part of the reason prices are up is that consumer demand has risen. And rising demand is an indication that Americans are in a stronger position to spend.

But while it's easy to see that there have been many economic improvements over the past few months, the big question remains: Is the economy fully back to normal? And the answer is...close, but not quite.

A slow process

As of July 16, the Back-to-Normal Index, a metric created by CNN Business and Moody's Analytics, stood at 91%. That means the economy is almost back to normal, but it still has some work to do.

That said, just as the last 10 pounds are always the hardest to lose when on a diet, that last 9% may be tough to achieve. The economy is still down millions of jobs compared to the number available before the pandemic, and some of those jobs may never come back.

Also, going from 91% to 100% will hinge largely on how things progress in terms of the pandemic itself. After weeks of declining cases, COVID-19 infections are on the rise again as the more transmissible Delta variant continues to put unvaccinated people at risk. If states and cities are forced to reimpose restrictions in an effort to curb the outbreak, that will hinder our economic progress.

Of course, all of this begs the question of whether there will be more widespread stimulus aid. Many people are hoping a fourth stimulus check will magically work its way into their bank accounts before 2021 comes to a close.

While it's too soon to say definitively whether there will or won't be a fourth check, based on the economic progress that's been made so far, a follow-up stimulus round isn't all that likely. This especially holds true given that so many states are actually facing labor shortages, where there are more jobs to be had than people who are willing or able to take them.

At this point, it's fair to hope that the Back-to-Normal Index will gradually inch forward from its current level to that 100% mark. But it may take a fair amount of time to get there.