The Covid-19 Delta variant seemed to mitigate economic growth this summer, but economists expect the pandemic recovery to accelerate again as the virus’s damage is mitigated.
In recent weeks, many economists have seen economic growth in the third quarter, mainly because consumers have delayed spending on food, hotels and airline tickets amid the proliferation of highly contagious delta variants. I lowered my forecast. The Covid-19 surge also complicated the reopening of offices and schools, turning what was expected to be a September boom into a recession.
One wildcard is a continuing supply constraint, including a shortage of products and workers, which is more serious than many analysts expected, contributing to the downgrade of inflation and growth expectations.
Constraints such as backups at US ports and turmoil in overseas manufacturing continue, but the Federal Reserve and economists hope they will eventually be eased.