IT WAS INEVITABLE that global economic growth would slow from the breakneck pace resulting from economies recovering from the pandemic. Lately, investors have been worried about something worse: that America’s economy, which spearheaded the rise of the rich world, could slow down sharply. In addition to delivery bottlenecks and the discontinuation of economic stimulus programs, the country is now, like many others, confronted with the ultra-infectious Delta variant. A painful slowdown remains unlikely. But re-spread of the virus is the greatest of these three threats.
To see how the rich world’s latest waves of coronavirus are likely to play out, consider that on July 20, America reported a seven-day moving average of 112 new cases per million people. About there was the UK with higher vaccination rates, more restrictions and more deadly outbreaks in the past in mid-June before Delta got going. The UK now has 699 cases per million, the fifth highest rate in the world. If all else is the same, Delta is spreading two or three times as fast as the original strain of the virus.
Fortunately, vaccines prevent almost all serious illnesses, and treatments have improved, saving more lives among those infected. That’s why England canceled almost all restrictions on July 19th. But vaccines still let many symptomatic infections through the net: 12-21% of them for the Pfizer vaccinations America has used the most. Delta is so contagious that, even after successful campaigns, countries will struggle to vaccinate to the herd immunity level that stops the disease from spreading. Given that 44% of Americans of all ages have not received a single dose, cases in the United States are likely to skyrocket. States like Mississippi and Louisiana, where about three in five people are completely unvaccinated, risk sudden and severe outbreaks.
The economic consequences will depend on how politicians and consumers react. So far, Los Angeles has brought back its mask mandate and New Orleans says it is investigating new restrictions. Even if vaccines allow policymakers to avoid a return to harsh measures, consumers may be too anxious to visit bars and restaurants. In the UK, mobility measures have only decreased slightly since June, but the experiment is still new. Exponential growth means that things can change quickly.
Delta’s risk is more unsettling than the other problems facing America’s recovery; This supply will have a hard time meeting demand and the incentives will have to be removed. As long as the economy stays open, it can ride these bumps.
Scarcity, especially of microchips and space on container ships, has pushed consumer price inflation to 5.4%. Real wages have fallen over the past year as rising prices have weakened workers’ purchasing power and there are signs that inflation is affecting consumers. But during the pandemic, households accumulated an additional $ 2.5 trillion in savings, 12% of that GDP in 2019. In June, a record number of Americans told polling firm Gallup that they themselves are thriving. It may be hard to get your hands on a car at a decent price, but as long as Americans venture out of their homes, the service sector can power the economy.
Withdrawal from some forms of stimulus can even help. There is a shortage of workers in the service industry. The end of the extended unemployment benefits, which will become generalized at the end of September, could bring some of them back into the labor market. Other political cliffs, such as Lifting of eviction moratoriums At the end of July cause uncertainty. But the pain is concentrated there rather than widespread, because the housing market is booming and there are many vacancies.
For economic recovery to continue, people must be willing to mingle with others. But that is exactly what threatens the Delta variant in America and around the world. ■
You can find all of our stories about the pandemic and vaccines on ours Coronavirus Hub. You can also find trackers that appear the global introduction of vaccines, Outnumber of deaths by country and the virus is spreading everywhere Europe and America.
This article appeared in the Leaders section of the print edition under the heading “Deltas Beta”