The economy could get help from positive news about the delta variant

If the U.S. recovery is to progress, it will need help to fight the Covid Delta variant, and there are indications that the tide may be turning, albeit slowly.

Cases continue to rise but at a slower pace. This may not be very comfortable, as the national rate is still around 150,000 a day, but it is giving rise to hope that business and consumer activity can keep the economy on track to pre-pandemic levels. .

“The percentage of increases in cases and hospitalizations decreases each week, indicating a progression toward a national peak,” Chris Meekins, Raymond James ’health policy research analyst, said in a note. “Although a few days later than expected, the southern states that were initially the hardest hit by the delta variant appear to be at their peak or have reached their peak.”

According to the Meekins count, the rate of increase in cases has been reduced to 11.7%, while the level of hospitalizations is 14.7%, well below their respective totals of 32% and 37% two weeks ago.

At the same time, metrics for economic reopening continue to improve, albeit also at a slower pace, as the rise of the delta has raised concerns about what awaits us.

Google Mobility data helps to highlight the uneven nature of recovery, as well as the slow but steady journey.

As of August 17, recreation figures showed strong continuous gains, although they were well off their highs. The mobility of parks, beaches and other public areas increased by 31% over the five-week period prior to mid-February 2020, less than a month before the official pandemic declaration.

In contrast, mobility in the workplace was still very far from the pace, 33% lower than pre-pandemic levels, while transit stations had 23% less traffic. Retail trade and leisure also remain in the shadows, while the activity of groceries and pharmacies has resumed a little above.

A tracker that Jefferies has been using to assess the degree of proximity of the economy to pre-covid levels has been close to 100% in recent weeks, and even briefly touched that barrier in late July.

Delta “has an impact, we have to acknowledge it. I wouldn’t say it’s significant. I think it’s moderate and, in many cases, very localized,” said Aneta Markowska, chief financial economist at Jefferies. “It’s really causing a loss of momentum rather than a marked economic weakness, and there’s a good chance it’s going to be short-lived.”

In fact, many medical professionals see the delta peak in the fall, although estimates vary.

As of Friday, the Jefferies crawler has 99% “normal” activity, with web traffic on foot and retail between metrics above pre-pandemic levels, while traffic was 70.3% and international flights of 56.4%.

As for the delta, the figures, like those of the pandemic, are still worrisome, but they are moving in the right direction.

The latest look at Fundstrat research, Tom Lee, on data over Monday night shows that some of the states that experienced the worst outbreaks in the delta are also seeing a decline in the case of growth. They include California, Nevada, Florida, Louisiana, Arkansas, Maine, Rhode Island and Delaware. There are nine other states that appear “provisionally flattened,” including New Hampshire, South Dakota and Washington.

“We will have a better sense for these states in the coming days,” Lee said. “But for me the key to taking away is that even with the delta variant, states won’t see cases increase indefinitely. There’s a peak.”

However, policymakers and economists are concerned that the delta may have a greater impact than previously thought.

Goldman Sachs last week withdrew its third-quarter GDP growth projection to 5.5%, up 9%. In addition, the Federal Reserve said Friday it would move the annual Jackson Hole symposium this week to a fully virtual event in light of virus problems in Wyoming.

Still, the Fed is likely to begin withdrawing this year from its policy adjustment, and 5.5% remains strong growth.

Both the economic number and the number of viruses paint a picture of a turbulent recovery, but which is nevertheless progressing.

“The Delta variant is likely to slow the rebound even further, as companies and employees will return to the office this fall,” Steve Blitz, chief U.S. economist at TS Lombard, wrote. “Delta is therefore expanding this decline in growth, followed by a synchronized global recovery that ultimately outpaces the expansion of the previous ten years, at least for the United States. To be clear, the slowest growth now is just that. : a recovery is still in progress “.