The emergence of the delta variant around the world and among the non-vaccinated population in the United States presents another round of economic risks that are part of the reason why we recently lowered our growth forecast for the year from 7.5% to 7%.
The delta variant has caused renewed lockdowns across Asia and is a growing concern in Europe as well as South America.
It appears that an arc of instability from Georgia to Texas with points as far north as Missouri and west to Nevada could lead to another round of economic uncertainty linked to the new dominant strain of the virus.
This variant has caused renewed lockdowns across Asia and is a growing concern in Europe as well as South America. It is one reason why global financial markets have sold off in recent days and why yields on long-term bonds are dropping as investors attempt to understand the social, economic and political risks linked to the variant.
Those risks have to be placed in the context of the constructive developments of the past several months. For example, since December, roughly 159 million Americans, or 48% of the total population, have been fully vaccinated, according to the Centers for Disease Control and Prevention and data compiled by Johns Hopkins University and Bloomberg.
And the population of people eligible for vaccination has expanded to include children as young as 12. That alone should help alleviate stress on families and hasten the full reopening of the economy going into the school year.
While the stress will not disappear overnight, we do expect that the slow, if unsteady, progress in vaccination around the U.S. and the world will reduce the risks around the emergence of the variant and continue to support the economic recovery.
The pace of administering vaccines has slowed from a peak of 3.4 million doses per day in April to half a million per day in the first weeks of July. That has flattened the curve for fully vaccinated people, and has left a sizeable population of unvaccinated people for variants of the virus to attack. This will need to be addressed at all levels of government.
A recent report from the North Carolina Department of Health and Human Services identifies the delta variant as spreading faster than other COVID-19 variants, and early studies are pointing to an increased risk of hospitalization.
Since May, more than 99% of new cases in North Carolina have occurred in people who were not fully vaccinated, the report said, confirming similar data from other regions of the country.
The CDC has yet to release data on the rate of infection among the unvaccinated. But a recently expanded study from the CDC found that mRNA COVID-19 vaccines from Pfizer-BioNTech and Moderna reduce the risk of infection by 91% for fully vaccinated people. In addition, fully vaccinated people who still get COVID-19 are likely to have a milder, shorter illness and appear to be less likely to spread the virus to others.
Still, risks remain in the U.S. economy as a large unvaccinated domestic and international population remains vulnerable to the delta variant:
- Not being able to keep up with virus mutations
- The potential of additional shutdowns
- The indirect costs of an overwhelmed health system
Last year was a clear example of those costs.
The burden for businesses will be managing a segment of the workforce that remains a danger to fellow employees and customers.
Increasing infections, decreasing deaths
Newly reported cases of COVID-19 are increasing again, from 12,000 per day on June 21 to 18,000 per day as of July 10—a 50% increase in 19 days, according to seven-day moving averages from Worldometer.
Over the same period, deaths have declined by 29%, from 313 per day to 222, according to Worldometer.
Because deaths lag increases in infections, we anticipate deaths in July approaching 27,000 Americans, up from 11,000 in June. No matter the exact number, the efficacy of the vaccines is such that many deaths can be avoided.
In total, cases of infections are approaching 35 million Americans, of whom nearly 623,000 have died.
For more information on how the coronavirus pandemic is affecting midsize businesses, please visit the RSM Coronavirus Resource Center.