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The increased public interest in the Delta variant has coincided with slowing spending in key industries, according to a JPMorgan (JPM) research report by senior economist Jesse Edgerton and economist Peter McCrory.
“The number of COVID cases is still growing rapidly, even in highly vaccinated states,” the report says. “Research data from Google (GOOG, GOOGL) suggests that public attention to the Delta variant has intensified in recent weeks, and spending on the Chase card in certain travel and entertainment categories has plummeted.”
Google search statistics for the “Delta variant” increased towards the end of June amid an increase in cases in India and Europe. Searches then accelerated again and nearly tripled since mid-July as COVID-19 cases started to rise again in the United States, JPMorgan found.
“Looking ahead, the slowdown in the growth of cases in states leading the current US wave like Louisiana and Missouri suggests that the US may follow the UK experience with a spike in cases by one. months, “the report adds.
And although deaths from the current wave “remain moderate,” the report notes, the number of new cases in the United States has almost increased eightfold since mid-July, with the Delta variant now the dominant strain in several. States.
Softened spending
According to data on card spending from Chase, airline spending fell nearly 20% from a peak in mid-July, which the report noted as a “larger drop” than seen in July. of the outbreak of cases during the winter of 2020.
“On the other hand, catering spending has declined only modestly and so far much less than during the winter wave,” the report reads.
A Bank of America (BAC) global research report by US economists Michelle Meyer and Anna Zhou produced similar results, claiming that total card spending based on aggregate BofA credit and debit card data had ” significantly decelerated to a 10% 2-year growth rate for the 7 days ending July 31, ”down more than 8% from the previous week.
For BofA’s card data, transit and airlines posted the largest declines in spending growth, followed by online retail, clothing, general merchandise and groceries. Gasoline sales and department stores were the only two sectors that experienced a positive evolution in the 2-year growth rate.
“This may reflect a number of factors, including the timing of the pay period, a reversal of the increase in the Child Tax Credit (CTC) and a change in consumer behavior due to the Delta variant,” indicates the BofA report.
Looking ahead, further declines in spending can be expected as COVID-19 continues to spread, according to JPMorgan. However, the JPMorgan report suggested that the next peak in US cases may soon pass, as UK cases “peaked around three weeks after reaching current levels per capita in the United States.” States like Missouri and Nevada, which were hit hardest by Delta initially, are now experiencing relatively slower case growth rates, pointing to the possibility of an imminent reversal in spending trends.
And with millions of Americans set to lose improved unemployment benefits starting in September, it is not yet clear how much that will affect overall spending. Even as the Delta variant grows, Washington has yet to show interest in extending the benefits.
The overall personal savings rate also remains high from pre-pandemic levels, but is down significantly from the March high. In addition, although personal income increased by $ 21.6 billion for the month of June, an increase of 0.1% from the previous month, personal disposable income decreased by 0.1% during the month of June. from the same period according to the Bureau of Economic Statistics (BEA). That meant Americans had $ 2.6 billion less disposable income in June than in May, with the personal consumption expenditure (PCE) price index rising 4% in June from the previous year. last year.
Thomas Hum is a writer at Yahoo Finance. Follow him on Twitter: @thomashumTV
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