COVID-19 Delta variant won't derail economy: Goldman Sachs

Brian Sozzi
·Executive Editor
2 min read
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In this article:

COVID-19 cases are back on the rise in the U.S. as the Delta variant spreads and some persist to oppose getting vaccinated.

But despite their risk to the economic recovery, Goldman Sachs isn't yet ready to view it as a major problem for growth this year.

"We think the near-term economic impact of a virus resurgence in the U.S. would be modest," said Jan Hatzius, Goldman Sachs' chief economist, in new research.

Hatzius lists three reasons behind the call, which appears to be shared by broader market participants as stocks have continued to hit new records in the face of the pickup in COVID-19 infections in recent weeks.

"Widespread vaccination provides protection against severe infections, and the elderly populations most at risk of severe infection have high vaccination rates even in states with low overall vaccinations, making renewed policy restrictions less likely," Hatzius explained.

Hatzius continued, "Measures of consumer activity in the U.K., such as spending and mobility, have declined only modestly over the past several weeks, and surveys suggest that U.S. consumers have not meaningfully increased their avoidance of riskier activities. High-frequency measures of consumer spending and restaurant bookings in the U.S. have responded very little to new virus cases and deaths at the county and city level.

That said, the resurgent virus globally warrants watching, especially as stocks trade at historically high valuations. Any slowdown in the economic recovery at the hands of the virus — which could be shared by companies during the incoming earnings season — will likely be penalized by market participants.

Confirmed COVID-19 infections rose to about 23,600 on Monday, more than double the level on June 23, according to the Associated Press. The AP cited Johns Hopkins University data. Every state except Maine and South Dakota reported an increase in COVID-19 infections over the past two weeks.

According to data from the Mayo Clinic, 55.3% of the U.S. population has received one COVID-19 vaccine. And about 48.3% of the U.S. population is seen as fully vaccinated against the deadly virus.

Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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