U.S. businesses are learning to adapt to the ebb and flow of the Covid pandemic and the delta variant of the coronavirus, if Friday’s monthly employment data is any guide. The economy added almost one million jobs in July and the unemployment rate shrank to a new pandemic low. Read: U.S. adds 943,000 jobs and unemployment sinks to 5.4%
Perhaps it shouldn’t come as a surprise the delta strain hasn’t made a big dent in the U.S. economy so far. After dealing with the pandemic for a year and a half, individuals, companies and governments have learned how to cope with the pandemic. Even last winter, when the U.S. experienced its biggest Covid wave of all, the economy kept growing. Companies briefly stopped hiring in December and then quickly went back to adding workers once the vaccination rollout began. This time around, governments have been especially cautious about adding new restrictions on businesses and consumers. Officials have reimposed indoor mask mandates in some places and adopted a few precautionary measures, but they have avoided sweeping restrictions that would do harm to the economy. “We do not expect state authorities to implement another wave of Covid-19 restrictions, beyond mask mandates or capacity restrictions for some businesses,” said Cailin Birch, global economist at The Economist Intelligence Unit. “This will help to minimize the impact of the latest case surge on economic activity and job creation.” The high level of vaccinations across the U.S. is a chief reason why. Some 70% of American adults have received at least one vaccination shot and they appear well protected from severe health effects even if they get infected with the highly contagious delta strain. Americans, for their part, are tired of being cooped up. While millions are also taking extra precautions, they are still flying, traveling and going out in much greater numbers than at any time since the pandemic began in early 2020. Take airport flights. Some 2.06 million flyers went through U.S. airports on Thursday. That’s almost three times higher than a year ago and not far from the post-pandemic high set just two weeks earlier. Companies, meanwhile, have adopted all kinds of strategies to make their workplaces safer for employees and customers. Many would have gone out of business if they hadn’t adopted so quickly. “What we’ve seen … is with successive waves of Covid over the past year and some months now, there has tended to be less in the way of economic implications from each wave,” Federal Reserve Chairman Jerome Powell said last week. “We will see whether that is the case with the delta variety, but it’s certainly not an unreasonable expectation.” All bets could be off, of course, if new case numbers keep surging. The delta variant could force governments to take tougher measures, for one thing. And some businesses are already requiring employees and customers to be vaccinated, a potential drag on the economy if fewer workers show up or customers stay home. Read: Inflation surges again in June as shortages plague U.S. economy Consumers themselves might start to stay home more until the latest wave passes, a potential thorn for restaurants, hotels and other businesses experiencing a rebirth after getting pummeled early in the pandemic. The unemployed could also take longer to return to work and exacerbate a nationwide labor shortage. Nor does the July jobs report, as good as it was, offer clear and convincing proof that the path for the economy is clear. The employment survey was completed by the middle of last month before the delta variant became such a huge source of angst. “Personally I’m not that worried about overall economic impact being large or lasting, but it’s worth noting that current data doesn’t tell us anything useful in that regard,” said Tom Graff, head of fixed income at Brown Advisory.