The economy could be helped by positive news on the delta variant

If the U.S. recovery is to progress, it will need the help of efforts to tackle the delta Covid variant, and there are signs the tide could turn, albeit slowly.

Cases continue to increase but at a slower rate. This may not be very comforting with the national rate still around 150,000 per day, but it does give hope that business and consumer activity can keep the economy on track to previous levels. the pandemic.

“The percentage increase in cases and hospitalizations is decreasing every week, indicating progress towards a national peak,” said Chris Meekins, health policy research analyst at Raymond James, in a note. “While a few days later than expected, the southern states that were initially hardest hit by the delta variant appear to be peaking or having peaked.”

According to Meekins’ tally, the rate of increase in cases has slowed to 11.7% while the level of hospitalizations is 14.7%, well below their respective totals of 32% and 37% two years ago. weeks.

At the same time, economic reopening measures continue to improve, but also at a slower pace, as the rise in the delta has raised concerns about what lies ahead.

Data from Google Mobility helps to highlight the uneven nature of the recovery as well as the slow but steady path to the top.

As of August 17, figures for recreation showed solid and continuing gains, even though they were well below their highs. Mobility for parks, beaches and other public spaces increased by 31% compared to the five-week period to mid-February 2020, less than a month before the official declaration of a pandemic.

In contrast, workplace mobility was still well below pace, down 33% from pre-pandemic levels, while transit stations saw 23% less traffic. Retail and leisure also remained a little below, while the grocery and drugstore activity picked up a little above.

A tracker Jefferies used to gauge how close the economy is to pre-Covid levels has hovered nearly 100% in recent weeks, and even briefly hit that barrier in late July.

Delta “has an impact, we have to recognize that. I wouldn’t say it’s important. I think it’s moderate and in many cases very localized,” said Aneta Markowska, chief financial economist at Jefferies. “This only causes a slowdown rather than a pronounced economic weakness, and there is a good chance that it will be short-lived.”

Indeed, many healthcare professionals see the delta peaking in the fall, although estimates vary.

Through Friday, the Jefferies tracker is recording activity at 99% of “normal”, with retail and pedestrian web traffic among metrics above pre-pandemic levels, while transit does was only 70.3% and international flights only 56.4%.

As for delta, the figures, like those for the pandemic, are still worrying but are going in the right direction.

Fundstrat’s research director Tom Lee’s latest look at the data overnight Monday shows that some of the states that have seen the worst delta bursts are now also experiencing a decline in the growth of cases. They include California, Nevada, Florida, Louisiana, Arkansas, Maine, Rhode Island, and Delaware. There are nine other states that appear to be “tentatively flattening” in their numbers, including New Hampshire, South Dakota and Washington.

“We’ll get a better idea of ​​these states in the next few days,” Lee said. “But the main takeaway, for me, is that even with the delta variant, states won’t see cases increase indefinitely. There is a spike.”

Still, policymakers and economists fear the delta may have a bigger impact than expected.

Goldman Sachs last week lowered its projection for third-quarter GDP growth to 5.5% from 9%. Additionally, the Federal Reserve announced on Friday that it will be moving its annual Jackson Hole Symposium this week to a fully virtual event in light of the virus issues in Wyoming.

Still, the Fed is expected to start backing down this year on its accommodation policy, and 5.5% remains strong growth.

Economic and viral figures paint a picture of a choppy recovery, but one that is progressing nonetheless.

“The Delta variant is likely slowing the rebound further, as companies and employees step down from returning to work this fall,” wrote Steve Blitz, chief US economist at TS Lombard. Delta is therefore extending this fall in growth to be followed by a synchronized global recovery that ultimately outshines the expansion of the previous ten years – at least for the United States. To be clear, slower growth now is not. than that – a recovery is still underway. “