Coronavirus update: The rise of the delta variant

The coronavirus is spreading once more, with daily reported cases in the United States nearly four times higher than only four weeks ago.

The Centers for Disease Control and Prevention reports that because of its transmissibility, the delta variant of the virus is now responsible for more than 83% of COVID-19 infections. Sixteen weeks ago, the variant accounted for fewer than 1% of infections.

The CDC also reports that most of this latest spread is occurring in rural communities, where high levels of vaccination resistance combined with other ailments put those populations at increased risk for severe illness and death.

Most of this latest spread is occurring in rural communities, where high levels of vaccination resistance combined with other ailments put those populations at increased risk.

The CDC’s report outlines the depth of this latest health crisis and in our opinion highlights the potential for an enduring economic problem: Approximately “60 million people in the United States live in rural counties, representing almost one fifth (19.3%) of the population.” The CDC adds that by September 2020, “COVID-19 incidence (cases per 100,000 population) in rural counties surpassed that in urban counties.”

The CDC says that rural areas “often have a higher proportion of residents who lack health insurance, live with comorbidities or disabilities, are aged older than 65, and have limited access to health care facilities with intensive care capabilities.”

But there are socioeconomic factors as well. A survey by the Kaiser Family Foundation in March found that 21% of rural residents said that they would “definitely not” get a vaccine compared with 10% of urban residents.

Among the rural respondents age 18 to 64, 45% said that they would “definitely not” get a vaccine compared with 8% of older adults age 60 to 69. Rural residents who reported that they would “definitely not” get a vaccine were more likely to report not having a college degree and earning less than $40,000 a year.

And there are well-reported ideological components to the urban-rural divide. Kaiser’s June update attributes general vaccine hesitancy to a range of views, including “they just don’t want to get the vaccine (63%), they don’t trust the government (55%), they don’t think they need the vaccine (54%), and that they don’t believe the vaccines are safe (50%).”

“This is becoming a pandemic of the unvaccinated. We are seeing outbreaks of cases in parts of the country that have low vaccination coverage because unvaccinated people are at risk,” according to a recent White House briefing from the CDC and National Institutes of Health.

The briefing adds that communities that are fully vaccinated are generally faring well and that data from the UK’s experience with the delta variant are that the Pfizer-BioNTech vaccine—as well as the Moderna vaccine in the United States—is 96% effective against hospitalization.

“We are dealing with a formidable variant in the delta variant,” the briefing said. It added that this danger is compounded by “the extreme vulnerability of people who are not vaccinated, which will account for infections, hospitalizations, and, ultimately, deaths.”

A bright spot has been a recent uptick in vaccinations. But will that be too little too late for the economy? And what will be the impact if local economies are subject to another set of shutdowns, similar to episodes in the UK during its struggle with the delta variant?

A paper by Austan Goolsbee and Chad Syverson published last year at the Becker Friedman Institute for Economics at the University of Chicago found that the impact of the coronavirus on the economy was irrespective of government-imposed restrictions on activity. Instead, the economists found, changes in consumer behavior were more likely influenced by the number of deaths reported in their county.

Although the shutdown orders had little aggregate impact on a local economy, consumers moved away from nonessential to essential businesses, spending less at restaurants and bars and more at grocery stores.

The findings of Goolsbee and Syverson support the notion that the public tends to move faster than government intervention or inaction.

Findings from the CDC paper and public health surveys suggest that personal intervention will be necessary during voluntary vaccination programs. Isolated communities will most likely need outreach efforts from trusted members of the community and a reason to accept the outreach. An example is the near-universal acceptance of smallpox vaccinations for children before entering public school.

The emergence of the delta variant around the world and among the unvaccinated population in the United States presents another round of economic risks. Given the public’s response to the pandemic, we have lowered our growth forecast for the year from 7.5% to 7%.

The pandemic in five charts

Vaccinations: Even as the risk of infection has increased recently, there have been constructive developments over the past several months. For example, since December, roughly 163 million Americans—49.5% of the total population—have been fully vaccinated, according to the CDC and data compiled by Johns Hopkins University and Bloomberg through July 25.

The pace of administering vaccines has slowed from a peak of 3.4 million doses per day in April to 583,000 per day at the end of July. That leaves a large population of unvaccinated people for variants of the virus to attack.

Infections and deaths: Newly reported cases of COVID-19 are increasing again, from 12,000 per day on June 21 to as high as 50,000 per day on July 23. That’s a significant increase in a short amount of time, based on seven-day moving averages from Worldometer.

Deaths are edging higher again, to 266 deaths per day. And because deaths lag infections, we anticipate that number to increase unless vaccinations are quickly adopted.

In total, the number of newly reported infections has surpassed 36 million Americans, of whom more than 626,700 have died.