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Economy is moving wrong direction as COVID’s Delta Variant hurts manufacturing, production

September was supposed to be a powerful month in the U.S. story of economic recovery. However, that hope began falling apart when the August jobs report was released — showing that just 235,000 jobs had been added to it.

Rebound was being stifled by COVID-19’s Delta Variant, which has put school reopening into turmoil, and even exacerbated some of the supply chain issues that were supposed to continue improving as 2021 moved forward.

At the end of the day, the virus is driving the economy. It’s not even always necessarily restrictions that are driving it. It’s the way people respond,” explained Professor Jay Shambaugh. He teaches Economics and International Affairs, and serves as the Direct of the Institute for International Economic Policy at George Washington University.

Use chip production for vehicles as an example. Thousands of brand new vehicles have been sitting in factories unable to be sold because computer chips are needed. “Chip production gets shut down in Malaysia for two weeks because of COVID or Vietnam shuts a port or China shuts a port and in an integrated global supply chain, that can slow things down,” he explained.

There’s no clear, short-term answer. Supply chain issues will take months, perhaps as much as a year to fully-recover — and that depends on how quickly Delta Variant cases subside. In parts of the country where vaccines are being refused — it could take longer — putting the entire U.S. recovery on permanent hold. 

Unlike the start of the pandemic when economic policies could drive the U.S. in a positive direction through stimulus payments, shutdowns, or other protections — the same can’t change current trend. 

While some states are trying to move forward with vaccine mandates — especially as Pfizer received full-authorization from the Food and Drug Administration — there’s little chance of a universal policy on that front like that seen during the early days of the pandemic.

When COVID-19 arrived in the U.S. entire states shut down in a matter of weeks — forgoing debate about effectiveness. Direct aid payments in form of stimulus were sent out within weeks to keep families whole. Unemployment was increased to compensate for unprecedented economic restrictions.

But none of those policies will change the reality that until vaccination reaches every community in the U.S., and variants like Delta are tamped down through those measures — economic recovery will be slow … and potentially impossible.

RELATED: How the U.S nailed the economic response to COVID-19 (The Wall Street Journal)

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