The U.S. economic recovery is being threatened by the COVID-19 delta variant. Increasing vaccination rates is the most important thing the U.S. can do to sustain the economy over the next few months. Beyond that, however, full recovery might require creating new vaccines against delta and other emerging variants.

U.S. stock markets and Treasury yields took big dips in recent days before rebounding. Despite the bounce-back, the volatility is evidence that investors are worried about the health of the recovery. It’s not just markets, either — there are some concrete signs of economic weakness, such as a week with an unexpectedly high number of initial jobless claims. The lights aren’t flashing red yet, but these are clear warning signs.

The obvious reason is the delta variant of COVID-19. This variant, which is both more infectious and more resistant to vaccines than previous versions of the virus, has become the dominant strain in the U.S. As a result, cases are rising again. If the U.S. ends up looking anything like the U.K., the country is in for another big wave of disease.

The economic risk isn’t a renewed policy of lockdowns and mandatory social distancing; the American populace and government officials seem to have had their fill of such restrictive measures. But in fact, lockdowns were never a very big contributor to the economic devastation of 2020. Evidence on the timing and the strictness of government-mandated social distancing measures has shown that economic harm occurred pretty much regardless. Nor did state-level reopenings give economies much of a boost.

But if lockdowns weren’t what hurt the economy, what was it? It was simply widespread fear of the virus. The existence of a deadly, highly contagious plague is a powerful reason to order from Amazon.com instead of going to a store, or to dine at home instead of going to a restaurant. Some people went out, heedless of the danger, but that paltry demand wasn’t enough to sustain local service businesses, which laid off workers.

After the initial wave, when masking became commonplace and people began to understand the risks of what they were facing, economic activity wasn’t so hobbled by fear, even during the disheartening fall and winter surge in late 2020 and early 2021. But it was only after vaccines became widely available that local economies really began to roar back to life.

Delta puts that rapid recovery under threat. Its high infectiousness means that even a fairly substantial percent of vaccinated Americans won’t be enough to protect the unvaccinated from getting the virus. And America has quite a lot of unvaccinated people, thanks in part to a right-wing campaign against the (safe and highly effective) vaccines. Even an apparent recent positive shift in Fox News’ tone toward vaccines is unlikely to counteract the corrosive effect of months of highly politicized anti-vaccination propaganda. And while some of those unvaccinated Americans will doubtless be as macho in their defiance of delta as they were with the original version of the coronavirus, some will deem it more prudent to avoid crowded indoor spaces just a little bit more.

Meanwhile, even vaccinated Americans may be hesitant to go out in the face of delta. The mRNA vaccines from Moderna Inc. and Pfizer Inc.-BioNTech SE significantly lower the risk of becoming infected with delta, and in the vast majority of cases they prevent the vaccinated from getting sick enough to be hospitalized or die. But they don’t entirely eliminate the risks — there’s a fairly substantial number of “breakthrough” infections, even among the fully vaccinated. And while that’s rarely life-threatening, there remains the possibility of the protracted symptoms called “long COVID,” even among young people.

Perhaps if this were March 2020, this level of risk wouldn’t be enough to deter Americans from going out to eat and shop. But they’ve had a year to adapt to the habits of social distancing, and many may just decide to extend their pandemic life a little while longer until the threat of delta has passed. To monitor whether this is happening, keep an eye on OpenTable restaurant reservation data. So far it doesn’t look too bad, but if that changes, watch out.

What can anyone do to allay this possibility? As before, only defeating the virus through more comprehensive vaccination will bring the economy fully, reliably back. We need an intensified public information campaign — including the right-wing media — to make that happen. But in the longer term, confidence might improve with rapid government approval of vaccine boosters specifically designed for delta and other variants that may now be emerging. Ultimately, it may take several iterations of vaccination to clean COVID out of the U.S. economy.

Noah Smith is a Bloomberg Opinion columnist. He was an assistant professor of finance at Stony Brook University, and he blogs at Noahpinion.

(13) comments

artandarchitecture

If test work, why the false positives?

If masks work, why the 6'?

If 6' works, why the masks?

If all 3 work, why close businesses/ lock down?

If all 4 work, why the vaccine?

If the vaccine is safe, why the no liability clause?

🧐 🤔

public-redux

Kindly let us know what you’ve learned, once you’ve something.

threecents

Oh my gosh, where were you these last two years. Businesses did lock down to greater and lesser extents throughout the world, and for the most part, the more they shut down and the more people masked and distanced, the less spread there was.

Experts says millions of lives were saved by the protective measures. Just look at the approximately 99% drop in flu cases for obvious proof. Still, none of those measures completely prevented spread. https://www.hsph.harvard.edu/news/hsph-in-the-news/a-sharp-drop-in-flu-cases-during-covid-19-pandemic/

artandarchitecture

3 Cents,

If Lockdowns Are Needed, Why Did More People Die In States That Locked Down Than Those That Didn't? - Tyler Durden 4/19/2021

https://www.zerohedge.com/covid-19/if-lockdowns-are-needed-why-did-more-people-die-states-locked-down-those-didnt

gabrielshorn2013

A&A, are you truly this ignorant? No test is 100% accurate, and there will be some false positives or false negatives. In the case of a positive, the subject may be retested. Check out the Cologuard commercial while you spend your day in front of the TV. As for masks and distancing, masks cut the aerosols from breathing significantly, and distance cuts that dispersion rate even further. It's called an orthogonal approach. Look it up. Three has already addressed your goofy business question. Why the vaccine? Because it is 95% effective in preventing serious disease and death. No vaccine is 100% effective, but the more people vaccinated, the more we slow the potential for mutation into something that the current vaccine is ineffective against. You just keep up your deep breathing in the QAnon barn full of BS. If you get CoViD, let us know how you're doing. Lost anybody you know yet? I have.

jth7100

The answer to your initial question is yes. Your excellent response along with threecents is casting pearls before swine.

artandarchitecture

Gabriel, you sure make many assumptions for a scientist.

I don't own an idiot box, and I don't follow any anonymous sources (& this includes"Q".)

Since you seem to live & die by the official, almighty, peer-reviewed studies. Here a recent one--

Published July 14, 2021 in a 🌟 peer-reviewed journal (Cell Reports Medicine)🌟

The good news: natural immunity to #SARS-CoV-2 is real and looks durable.

The bad: vaccines do next to nothing to help your CD8 T-cells - the key to long-term immunity

https://www.cell.com/cell-reports-medicine/fulltext/S2666-3791(21)00203-2#relatedArticles

In layman's terms Fully Vaccinated People are SEVEN TIMES More Likely to Contract COVID Than Those With Natural Immunity

"Israel National News recently reported that those who already had the virus at some point throughout the past year were more immune to Israel’s recent outbreak, while those who receive inoculation have been much more likely to fall ill in the latest wave."

"Natural Infection vs vaccination: Which gives more protection?" - David Rosenberg 7/13/2021

I'm glad to see the CDC is FINALLY abandoning the wildly faulty & completely unreliable, PCR CV19 test.

CDC's own website [archived]:

https://archive.is/NxUoz

artandarchitecture

Over 50 Scientific Studies Conclude Masks Do Nothing to Prevent the Spread of Illness, So Why Do People Keep Claiming They Work? by Daily Veracity, July 26, 2021

https://www.dailyveracity.com/2021/07/26/over-50-scientific-studies-conclude-masks-do-nothing-to-prevent-the-spread-of-illness-so-why-do-people-keep-claiming-they-work/

threecents

A&A, That is a prime example of you choosing bad news sources. I looked at some of those references from the article, and they mostly just show lack of a statistical difference in protection between different types of masks - not that masks are not protective. I did my own Pubmed search on "masks to prevent virus spread" and found over 480 peer-reviewed scientific publications. I looked at the first 30, and they were all from 2020-2021, and not one of them showed lack of protection from masks. Here is a typical quote: " We found that cotton masks, surgical masks, and N95 masks all have a protective effect with respect to the transmission of infective droplets/aerosols of SARS-CoV-2 and that the protective efficiency was higher when masks were worn by a virus spreader. Importantly, medical masks (surgical masks and even N95 masks) were not able to completely block the transmission of virus droplets/aerosols even when completely sealed." Here is another: "A total of 21 studies met our inclusion criteria. Meta-analyses suggest that mask use provided a significant protective effect (OR = 0.35 and 95% CI = 0.24-0.51). Use of masks by healthcare workers (HCWs) and non-healthcare workers (Non-HCWs) can reduce the risk of respiratory virus infection by 80% (OR = 0.20, 95% CI = 0.11-0.37) and 47% (OR = 0.53, 95% CI = 0.36-0.79). The protective effect of wearing masks in Asia (OR = 0.31) appeared to be higher than that of Western countries (OR = 0.45). Masks had a protective effect against influenza viruses (OR = 0.55), SARS (OR = 0.26), and SARS-CoV-2 (OR = 0.04). In the subgroups based on different study designs, protective effects of wearing mask were significant in cluster randomized trials and observational studies."

gabrielshorn2013

👍👍👍 three! Perfect response. Once again A&A's "expertise" comes shining through.

Greg F

Wear your #%^*! mask…get the shot…that or Darwin will find your stupid azz.

threecents

Greg, We took the horses to water but couldn't make them drink. It's frustrating, but we cannot change the nature of the beast.

Dwasserba

“…some will deem it more prudent to avoid crowded indoor spaces just a little bit more.” It doesn’t seem apparent overall but I know some of us aren’t back to the free movement we knew.

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