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The U.S. economy grew rapidly during the second quarter and exceeded its growth expectations during the first six months of 2021. However, with the spread of COVID-19 infection from the Delta variant, the growth of the U.S. economy could slow down.
Recently, the Centers for Disease Control and Prevention (CDC) reinstated its recommendation to require the use of masks in enclosed spaces, even for people already vaccinated.
For its part, Joe Biden’s administration warned that it is prepared to re-impose new closures if necessary to contain the spread of the virus. Although studies have shown that, so far, vaccines retain their effectiveness in counteracting the virus, health authorities fear that within the large unvaccinated population the virus may mutate into variants that vaccines cannot prevent.
The Delta variant is currently responsible for 70% of new infections in the United States, and according to information from the Israeli Ministry of Health – a country where more than 60% of the population is immunized – the effectiveness of vaccines to prevent infection may drop to 67% due to the spread of the Delta variant.
How could the Delta variant affect the U.S. economic recovery?
Economists see two ways in which the Delta variant could affect economic recovery: first, states re-imposing mobility restrictions to prevent the spread of the virus. Second, people may stop going out, looking for work, or moving around for fear of becoming infected.
Some companies have taken action and implemented measures to protect themselves from a possible wave of contagions due to this variant. Apple reported that it will once again require its customers and employees to wear masks at its headquarters.
Google/Alphabet delayed its plans to return to offices until mid-October. Several employers, both public and private, confirmed that they will require their employees to be fully vaccinated before they can return to work.
So far the restrictions have been limited in scope and have been restricted to implementations such as requiring the use of face masks in some locations, such as in Los Angeles County.
The high vaccination rate resulted in people returning to the streets and maintaining their spending levels during the pandemic. However, the pace of vaccination continues to slow and the younger population appears to be more resistant to inoculation than older generations.
Despite the presence of the Delta variant, Americans continue to travel, and both the number of flights and hotel occupancy rates have increased over the summer.
Likewise, consumption does not appear to be lagging, nor is it about to slow down. The main constraints consumers face in meeting their needs, rather than the Delta variant, is the ability of supply to maintain inventory available to the public.
In this situation, suppliers have built up inventory to shield themselves from the inflation that supply chain bottlenecks are causing, along with growing demand from Americans, which, for the time being, does not seem to be affected by the Delta variant.