Consumer Sentiment Declines As (Delta Variant) Cases Rise and Heightened Restrictions Loom

Chart by CNN Reliable Sources

America passed a significant milestone this week, reporting that 70 percent of adults in the U.S. have now received at least one dose of the COVID-19 vaccine, according to White House COVID-19 data. The news comes as the seven-day average of administered doses reached its highest number since early July. However, it also coincided with a surge in coronavirus cases due to the Delta variant. As reported by CNN Reliable Sources, “Sunday marked the fifth straight day of the CDC recording more than 700,000 shots in arms across the country.” 

Fueled by what many call a “media overreaction” and multiple “communications failures,” the last seven days “was a mess,” resulting in more questions than answers about the state of the pandemic. Confusion began when the CDC updated guidance and recommended that “vaccinated people in hot spots should wear masks in indoor, public settings.” Not only was this announcement a reversal from the CDC’s May 13 guidance that vaccinated individuals could be mask-free in most indoor settings, but the new recommendation did not provide a clear, consistent way for determining if an individual was in a hot spot or not. 

Seemingly hours later, the information crisis deteriorated even further after media outlets like The Washington Post and The New York Times reported a leaked CDC memo that suggested the Delta variant was as contagious as the Chicken Pox, leading to a frenzy across social media and a renewed concern for public health and safety. Only later was it discovered that the CDC report was related to a “cluster of COVID cases in Provincetown, Massachusetts, on Cape Cod, in which three-fourths of the infected people were fully vaccinated.” No deaths were reported, and only a few individuals were hospitalized. 

While cases continue to surge, as of now, several cities, including San Francisco, have re-instituted mask mandates in public spaces, while other parts of the country, like Texas, reinforced a pro-choice stance with new orders that prohibit mandatory vaccines, masks, and similar precautionary measures. 

Heading into this week, Americans are confused and frustrated with mixed messages and misinformation about the recent surge in coronavirus cases and the efficacy of the vaccine against the Delta variant. (Officials maintain that vaccines are more than 99 percent effective against the Delta variant.) Morning Consult reported that, since the beginning of the month, the Index of Consumer Sentiment (ICS) had fallen 4.6 points to 95.3, the lowest reading recorded since early March 2021. “The decrease is also the sharpest 3-week decline in the ICS since November 2020 when the third wave of the coronavirus was roaring through much of the country.” 

The decline in consumer sentiment is largely driven by a significant increase in the number of COVID-19 cases, which also resulted in worsening expectations around future business conditions. For now, The Wall Street Journal reports that “forecasters generally don’t expect the spread of Delta to make a major dent in the U.S. economy,” as businesses and consumers have “learned to adapt to each wave of the pandemic.” 

European countries faced a wave of Delta variant cases right before America did, which resulted in more countries re-imposing restrictions that could impact the region’s economic recovery. 

The French finance minister said he expected economic growth to hover around six percent for 2021, up from a previous five percent target, though he warned that forecasts could be revised “if the Delta variant took hold.” 

The Dutch government re-imposed restrictions on nightclubs, restaurants, and festivals.

In some areas of Spain, opening hours and curfew restrictions are commonplace. 

German officials reported that existing restrictions will be maintained until the country sees a higher vaccination rate. 

Last week also saw an increase in the number of companies that officially announced they would require all employees to be vaccinated before returning to office work. Similar to the decision to officially close office doors at the beginning of the pandemic, Silicon Valley’s tech companies led the charge, announcing vaccine mandates during company earnings calls. To date, some of the most notable U.S. companies to issue vaccine mandates for their corporate employees include Apple, BlackRock, Disney, Facebook, Google, Lyft, Morgan Stanley, Netflix, Twitter, and Walmart, among others. 

Reuters found in a recent survey that 90 percent of economists agreed that “new COVID-19 variants were the biggest risk to the eurozone economy,” which currently expects a 4.5 percent growth rate in 2021. In a note to clients, Bank of America reported that “where policy tools are limited and uncertainty high, the risks of over-confidence in the recovery loom larger than the risk of the economy running hot.” 

While the global economy remains “vulnerable” as long as the pandemic continues, we can expect more insight into how sectors like travel and tourism are faring during upcoming company earnings calls, including Marriott, Booking Holdings, and Expedia, which are on the docket this week.