Why Delta Threatens to Undermine the Economic Recovery
Spoiler: It’s not more lockdowns.
The delta variant is making even vaccinated people think twice about their Covid-19 risk.
Source: Bloomberg
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.