Businesses, schools, restaurants, and other establishments across the nation have reopened following increasing vaccinations and decreasing infections from the COVID-19 virus. However, the nation now faces a new obstacle: the COVID-19 Delta variant. With increasing infection rates from the Delta variant, Americans cannot help but wonder what will happen to our economy if the variant intensifies. Charleston financial advisors from Morris Financial Concepts believe they have identified a few key components that may affect our economic stability, and what we can expect from the variant in the coming months.
The Delta Variant of COVID-19
The COVID-19 Delta variant quickly began making headway in the US as early as March 2021. Accounting for more than 80% of new COVID cases, the Center for Disease Control and other medical professionals worldwide have warned that this variant is more transmissible than influenza, the common cold, and other strains of the virus.
While unvaccinated individuals are most at risk, this strain can also affect vaccinated individuals — currently the best method of defense against the SARS-CoV-2 virus. Following the release of this information, medical professionals urged both vaccinated and unvaccinated individuals to revert back to the original masking policies, which were lifted upon increasing vaccination and decreasing illness trends this summer.
Individuals worldwide have begun to recognize a pattern of illness and subsequent restrictions mirroring those from the initial COVID-19 breakouts. Because of this, there has been an increasing fear that this strain will take a detrimental blow on our newly-rebuilt economy, setting our nation back even further.
While it is still early in the evolution of the Delta variant, economists seem to maintain a hopeful perspective on the financial impacts of the new strain.
Current Economic Rebound and Delta Variant
To date, the economic recovery that Americans have experienced is steady. Economists predict that Americans will remain unphased in their economic activities as real-time business indicators show that the new variant is causing little to no impact on America’s current spending habits. However, it is still uncertain how the Delta variant will grow and change in the coming months.
Supply and Demand
One major fear surrounding the new Delta variant is the unknown impact that the strain will have on the reemergence of our current society. Speculation on whether this new strain will lead to lockdowns and business closures, similar to the shutdowns of last year, is often discussed.
Supply and demand are the most substantial economic risks of the current situation — and we have already seen restrictions caused by distributions to the supply chain severely affecting consumers. Have you been in the market for a new car recently? If so, you may have experienced dealerships possessing little to no inventory, priced at astronomical rates across the board. There is little to no room for negotiation in this scenario since dealerships do not have an inventory surplus. Many dealerships may even be offering you a considerable sum of money for your vehicle to sell it back to them. These unusual trends are a direct result of the economic supply shortage that we are experiencing.
Additionally, many suppliers are in cities that may already be experiencing lockdowns due to the Delta variant, causing even more shortages in the US. We can expect these shortages and inflated costs to worsen in the immediate future.
More locally, the United States is experiencing a labor shortage. As restaurants and businesses are finally able to reopen, many are finding it difficult to find employees and cannot run their business properly. Staff shortages then lead to business closures, which only worsens the labor shortage as additional employees are let go.
Additionally, citizens are reluctant to join the workforce again for fear of exposing themselves to COVID. Many individuals have health issues that may put them at a higher risk of contracting the virus and do not feel safe working around other employees.
As businesses reopen, Americans are spending more money — shifting away from the online shopping that consumers relied on during the worldwide lockdowns. An increase in demand for luxury goods is occurring across the country, yet supply shortages are hindering suppliers who are unable to keep up. Additionally, the demand for concerts, restaurants, and experience-based activities continues to rise, suggesting that the emergence of the variant is not deterring Americans from spending.
Will Things Remain the Same?
As the US is adjusting to another strain of COVID, the economic recovery efforts seem to remain stable. Overall, economists remain optimistic that the Delta variant will not affect our economy at a detrimental level.
It is crucial to plan for these unforeseen financial hardships to remain best prepared for the situation at hand. Working with one of the CERTIFIED FINANCIAL PLANNER™ professionals in Charleston at Morris Financial Concepts would enable you to create a plan for financial stability to protect yourself and your loved ones from the worst-case scenario.
The opinions expressed herein are those of Morris Financial Concepts, Inc. (“MFC”) and are subject to change without notice. MFC relies on information from various sources believed to be reliable, including third parties, but cannot guarantee the accuracy and completeness of any third-party information. The information contained herein is for educational purposes only and is not intended to provide, and should not be relied upon for, accounting, legal or tax advice or investment recommendations. The recipient should take their own independent legal, tax and financial advice. MFC is an independent investment adviser registered under the Investment Advisers Act of 1940, as amended. Registration does not imply a certain level of skill or training. More information about MFC including our investment strategies, fees, and objectives can be found in our ADV Part 2, which is available upon request. Certified Financial PlannersTM (CFP®) are licensed by the CFP® Board to use the CFP® mark. CFP® certification requirements include: Bachelor’s degree from an accredited college or university, completion of the financial planning education requirements set by the CFP® Board (www.cfp.net), successful completion of the CFP® Certification Exam, comprised of two three-hour sessions, experience requirement: 6,000 hours of professional experience related to the financial planning process, or 4,000 hours of Apprenticeship experience that meets additional requirements, successfully pass the Candidate Fitness Standards and background check, agree annually to be bound by CFP® Board’s Standards of Professional Conduct, and complete 30 hours of continuing education every two years, including two hours on the Code of Ethics and Standards of Professional Conduct. MFC-21-13.