Rising cases of delta variant could generate economic effects

·5 min read

New COVID-19 cases are creeping up once more as the delta variant takes hold, generating fresh concerns that the still-recovering economy could take another ding.

In June, the seven-day average for new cases dropped to just above 11,000 nationwide, creating optimism that the pandemic would soon be in the country’s collective rearview mirror. Although now, new daily cases, the overwhelming majority of which among the unvaccinated, have more than quadrupled.

Much of the surge has been blamed on the delta variant, a more virulent iteration of the virus that has quickly attained dominance in the United States, with the mutation now responsible for more than 80% of new infections, according to the Centers for Disease Control and Prevention. While one person infected with the original coronavirus would likely infect one to 2.5 other people, a person infected with the delta variant will likely infect 3.5 to four other people.

While the risk to vaccinated people is more than negligible, the surge has caused some states and localities to eye mitigation measures, affecting the economy.

Joel Griffith, a research fellow at the conservative Heritage Foundation, said that the economic fallout from a rise in cases is going to be contingent upon how state and local governments react to it. He pointed out the divergence in public policy when COVID-19 was at its peak, a divergence that saw some, usually more liberal, places impose stringent restrictions. In contrast, places such as Florida and Georgia eschewed them and pushed for businesses to operate freely.

“As this goes forward, it has a lot more to do with how politicians react than it does the actual health concerns,” Griffith told the Washington Examiner.

And the signs of restrictions are already starting to appear in some parts of the country. Citing the delta variant, Los Angeles County just reinstituted an indoor mask mandate, despite more than 60% of adults being fully vaccinated. In Chicago, Mayor Lori Lightfoot warned residents that restrictions could return should the variant get out of hand.

“If we allow the virus to continue to linger here in Chicago, we will likely see further mutations, some of which our current vaccines may not be able to protect against, and have to reinforce some of the restrictions that have come to infamously define much of 2020 and part of 2021,” she said.

Even without new restrictions, some places might feel a bit of an economic effect from people choosing to forgo dining out or attending crowded gatherings out of fear of catching the virus. However, Griffith thinks that will be limited. He pointed out that when restrictions were previously lifted, restaurants in many places rebounded back to their pre-pandemic business levels.

He said that factoring in the large share of people who have been vaccinated, the people that have chosen to reenter ordinary life despite the risk, and those who have already contracted the virus and feel as though they have a degree of protection, the vast majority of people will continue to live their lives despite a new uptick in cases.

M. Saif Mehkari, an associate professor of economics at the University of Richmond, told the Washington Examiner that he didn’t think that fear of leaving the house would have much of an economic effect, given U.S. weariness of the monthslong health crisis.

“I think people have saved a lot of money over the past year, and I think they’re ready to spend. I don’t think that spending is going away anytime soon,” he said of U.S. demand to go out to stores and restaurants.

While the U.S. has not imposed any renewed restrictions because of the delta variant surge, other countries have, and they could be harbingers for what could come. Countries such as France, the Netherlands, Greece, Spain, and Israel have recently announced new restrictions given surging levels of COVID-19.

Dutch Prime Minister Mark Rutte conceded this month that virus restrictions in his country, which were lifted last month, were phased out too soon. The government decided to close down nightclubs just days after they reopened, and restaurants are being forced to distance people, among other restrictions.

The French government announced that vaccines would be mandatory for healthcare workers in light of the rising infections, and a digital vaccine passport will soon be required to enter large capacity venues before becoming mandatory to access restaurants, malls, and transit in August.

Mehkari pointed out that the new wave of infections could affect the travel industry.

There is currently a travel ban on residents of more than two-dozen countries. President Joe Biden recently raised hopes of renewed travel from Europe after a news conference with German Chancellor Angela Merkel in which he said that a decision on lifting the bans would come “within the next several days.”

But with the rising surge of COVID-19 cases, plans to renew travel and thus invigorate the tourism industry could face further complications. Mehkari said he “would not be surprised” if the surge of cases could have some bearing on decisions to reopen borders between the U.S. and other countries.

In fact, just this week, the U.S. extended nonessential travel restrictions on Mexico and Canada through Aug. 21, even though Canada announced that it would be lifting its restrictions on Canadian travelers to the U.S.

Despite all of the attention surrounding the delta variant and this most recent spike in cases, the health outlook for vaccinated people is positive.

CDC Director Rochelle Walensky recently said that preliminary data suggests that 99.5% of the people who died of COVID-19 since the start of the year were not vaccinated. It also appears that the virus is now spreading the most in areas with low vaccination rates, such as Arkansas, Missouri, and Louisiana — all three states have a 40% vaccination rate or lower.

The U.S. economy has improved leaps and bounds since its biggest pandemic-era slump in April of last year, although the job market is still struggling to keep pace with rising prices, which are a sign of increasing demand. The June jobs report beat expectations with 850,000 new jobs, but the unemployment rate increased slightly from 5.8% to 5.9% and is nowhere near the ultra-low 3.5% level it reached before the start of the pandemic.

Washington Examiner Videos

Tags: News

Original Author: Zachary Halaschak

Original Location: Rising cases of delta variant could generate economic effects

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting