In the past few weeks, more government officials and agencies have begun to express their concerns that the Delta variant of COVID-19 is slowing down the economy, even though others choose to remain optimistic. More data evaluating consumer patterns seem to suggest that Delta is playing a role in how people spend money now — and likely how they will in the near future. The last government official to reveal this is U.S. Treasury Secretary Janet Yellen.
Yellen told senators in a Senate Banking Committee hearing that it is likely the Delta variant is keeping the U.S. economy from fully recovering as expected. This is for many reasons. Many consumers are worried about freely spending money while COVID-19 cases surge around the country. Money spent in travel-related industries has fallen because of the Delta variant, whereas previously these industries were surging with consumer demand before the variant became such an issue worldwide.
Already, many companies — from travel companies to fashion ones such as Nike — have warned their investors that sales expectations for the near future may not be as high as expected. For airline and hotel companies, this is because cancellations have become frequent, and bookings as a whole have become low because of the COVID-19 pandemic once again accelerating throughout the country and the rest of the world. For Nike and other fashion businesses, this is because they have experienced warehouse shutdowns where they normally produce their shoes, causing manufacturing to slow down astronomically.
Yellen also told senators she believes the United States will once again reach full employment by next year, even though hirings have slowed down, also possibly because of the Delta variant. Many economists thought that more people would return to the workforce after being laid off in 2020 when the pandemic first began. While many have returned to the workforce, there are still millions of workers who have not. Economists do believe that students returning to school will allow many workers to get jobs, though data has not yet revealed if this has happened, or will happen, yet.
So, Yellen has admitted that the economy is facing obstacles because of the Delta variant — and therefore slowing down — yet is still optimistic about the near future of the country as a whole. In her comments to senators, she also urged Congress to raise the debt limit.
By all accounts, the economy in the United States is currently in a fragile position. The holiday season will soon begin, and many analysts have forecasted that while this may be a good year for consumer demand and businesses, it may also be difficult for businesses to keep their shelves accurately stocked and meet this large consumer demand. While this holiday season may help the economy stay on track and work towards recovery, labor shortages and global supply chain issues continue to keep the economy from fully recovering as initially expected.
Therefore, even if consumers do continue to spend more money at businesses for the rest of the year, the economy may still slow down and struggle to fully recover because of the many issues and obstacles the country faces as a whole.
