Although 60% of American adults are now fully vaccinated, the uptick in coronavirus infections linked to the Delta variant has been accompanied by a slight rebound in fears over the spread of the virus. While most states appear unlikely to reimpose restrictions on activity, the upturn in infections still poses a downside risk to the economy over the coming months if it prompts people to voluntarily stay away from in-person services. This comes at a time when real consumption growth already appears to be faltering, as higher prices reduce purchasing power. Despite the solid rise in retail sales in June, the 0.9% rise in prices suggests that will translate to a small fall in real consumption for the second month running. The upshot is that real economic growth is slowing more sharply than we had originally anticipated, even before the potential impact of the new Delta variant.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services