US economic growth slows down, but still maintains recovery momentum

The US economy will grow slowly, but still maintain the recovery momentum

The recovery of the US economy will need the help of the arms against the Covid-19 epidemic and in fact the number of new infections tends to slow down.

The multinational investment bank Goldman Sachs has just lowered its GDP growth forecast for the third quarter of the US to 5.5%, from 9%. Photo: AFP

Good signal from business activities

The situation will not be very good if the rate of Covid-19 infections across the US remains at 150,000 cases a day, but this trend is on a downward trend. This raises hopes that business and consumption activities can keep the US economy back on track before the pandemic.

Chris Meekins, health policy analyst at multinational investment bank Raymond James said: “The rate of increase in the number of cases (Covid-19) and the number of hospital admissions are decreasing each week, this is a sign. suggests that the epidemic may have peaked nationally.” “Although the number of cases fell a few days later than anticipated, the states in the South that were initially hit hardest by the Delta variant appear to be peaking or having peaked,” said Chris Meekins. to add.

According to expert calculations Raymond James, the rate of increase in Covid-19 cases in the US has slowed to 11.7% while the hospitalization rate is 14.7%, much lower than the 32% and 37% respectively recorded in the two countries. last week.

Meanwhile, indicators of economic reopening continued to improve, albeit at a slower pace due to the spread of the Delta variant. Google Mobility data backs this up, but the recovery of business activities in the US has been uneven, although stability has improved.

Since August 17, statistics on entertainment activities in the US have continued to increase sharply. Travel to parks, beaches and other public areas also increased by 31% compared with the five-week period before mid-February 2020, the time before the official declaration of the pandemic.

However, the level of travel to the workplace is still not satisfactory when it is still down 33% compared to pre-pandemic levels. Particularly, the transfer stations have lower traffic volume, at 23%.

Retail and entertainment are also still under the shadow of the pandemic, but grocery stores and pharmacies are back to slightly better.

Although there are many conflicting estimates, US health experts estimate that the Covid-19 epidemic caused by the Delta variant will peak this fall.

The tool, used by the multinational investment bank Jefferies to gauge US economic activity, recently found that the US economy has come close to pre-pandemic levels that have fluctuated close to 100% in the past year. the past few weeks and even reached the pre-pandemic threshold for a brief period in late July.

The Delta variant is “having an impact, we have to admit it. I wouldn’t call it a severe impact. I think it’s moderate and in many cases very localized,” said Aneta Markowska. , chief financial economist at Jefferies Bank said. “It (the Delta variant – BTV) actually detracts from the recovery rather than weakening the economy significantly and it is more likely that it will be quite short-lived,” she added.

As of August 20, Jefferies Bank’s business tracking system shows that the traffic of retail websites in the US has reached 99% compared to the time before the epidemic, while the number of people in transit reached the level. 70.3% and international flights at 56.4% of normal.

Although there are concerns about the impact of the Delta variant on the US economy, the above figures show that the economic recovery is on track.

Data analysis new Updated on the night of August 23, Tom Lee, Head of Research at independent market consulting firm Fundstrat said, there used to be the worst boom of the Delta variant, but now the states, including: California, Nevada, Florida, Louisiana, Arkansas, Maine, Rhode Island, and Delaware are seeing a decreasing number of new infections. Meanwhile, the number of Covid-19 infections in New Hampshire, South Dakota, Washington and 6 other states seems to be “temporary”.

“We believe that the epidemic situation in these states will improve in the coming days,” said Mr. Tom Lee. “But I think the bottom line is that even with the Delta variant, the number of cases in the states will not increase forever and will peak,” added the Fundstrat expert.

Hold your breath waiting for the Fed’s decision

However, US policymakers and economists are concerned that the Delta variant could have a bigger impact than anticipated.

Last week, Goldman Sachs lowered its forecast for third-quarter US GDP growth to 5.5%, from 9%. In addition, the US Federal Reserve also said that it will turn the annual Jackson Hole Economic Symposium this week into a completely online event and focus on issues related to Covid-19 in the mountainous state of Wyoming.

It is likely that the Fed will conduct a narrowing of its economic stimulus package this year, so a rate of 5.5% is still considered a strong growth rate of the US.

Both the economic and Covid-19 data paint a picture of a tough recovery for the US economy, but nonetheless the recovery is continuing.

“The Delta variant is likely to slow the U.S. economic recovery even further, as companies and employees aren’t excited to get back to work this fall,” said Steve Blitz, chief economist at US Capital Economics. Macroeconomic forecasting consulting firm TS Lombard commented.

“The Delta variant prolongs the growth slowdown and is followed by a synchronized global recovery, which accelerated faster than 10 years ago, at least for the economy,” said the US economist. US economic growth. It is clear that US economic growth may be slower, but the recovery is still ongoing.”