Will the Delta COVID Variant Derail Current Economy?

Can banks expect demand for loans to return? Are investors ready to spend their money on the market? Have consumers started consuming like before? Answers to these questions reflect where the economy is headed. 

The Delta COVID variant has definitely thrown a wrench into global economic growth. Businesses have started feeling the effects of the variant and the recent surge continues to stress the financial world. While the impacts of COVID seems to be never ending, does that mean the Delta COVID variant will derail the current economy?

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Businesses that are getting most affected

According to a WSJ report, the surge in new cases is leading to disruptions in manufacturing and other factory operations that were just getting back to normal. 

Domestic and international airlines are seeing more empty seats in August than the prior months. As a matter of fact, many airlines continue to cancel flights due to a rise in ticket cancellations.

Around the consumer sector, businesses like grocery stores, gas stations, restaurants, and gyms that were only beginning to see some business have started seeing decline in sales in August. 

Hindrance in job growth

COVID cases due to the variant are even higher now than they were at the beginning of 2021. The increase in total active cases has potentially derailed the growth in jobs that were possibly lost during the pandemic in 2020. 

While retail, manufacturing, and construction make most of the jobs, they have not been recouped yet. 

How it has impacted the US economy

Businesses and households in the US seem to have adapted perfectly to the pandemic and aren’t facing many strains due to the new variant, believes James Bullard, St. Louis Fed President. 

In an interview, he said, “The economy has clearly adapted to the pandemic situation. Businesses have found ways to produce their products and services and households have found ways to continue consumption. I don’t see the delta variant stopping that process. We’ve made a lot of progress. Every indication is that labor markets are about as tight as they ever get.”

Guggenheim’s global CIO Scott Minerd, however, finds the situation not very smooth, by saying, “The variant is likely to prompt the Fed to take a more cautious approach to the speed of its tapering plan.” 

The CIO shares how the new COVID variant is having a material impact on consumer spending and delays Fed’s timeline for tapering asset purchases. Citing slumping July sales and lower credit card spendings, he further says, “The variant is already having a negative impact on the recovery.”

Coming back to the question in discussion – if the Delta COVID variant will derail the current economy – the answer cannot be a firm ‘No’ or a definite ‘Yes.’ On one hand, we have business ready and prepared to survive along with the pandemic. On the other hand, we see some industries that aren’t finding ways to recover any time sooner. 

Yes, the economy has adapted to the current pandemic, and businesses might have found their ways around it, but anything could cause turmoil in financial markets.

Suraj is a passionate blogger who writes for a global audience. His writings can be inspired from a myriad of topics to anything distinguishable that keeps a reader hooked. He has written for many websites and also been showcased as a guest author. Suraj lives in India right now.

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