Home > NewsRelease > Will the Delta Variant Take a Toll on Economic Growth?
Text
Will the Delta Variant Take a Toll on Economic Growth?
From:
Greg Womack -- Oklahoma Financial Advisor Greg Womack -- Oklahoma Financial Advisor
Oklahoma City, OK
Wednesday, September 15, 2021

 

The Delta variant could take a toll on economic growth.

There was some good news last week. The 7-day moving average of COVID-19 cases in the United States declined. The bad news was that the rate of infection remained about 99 percent higher than it was one year ago.

As Delta variant infections surged across the United States, expectations for economic growth dropped more sharply than anticipated. Lisa Beilfuss of Barron's reported on changes to third-quarter forecasts for U.S. gross domestic product (GDP) growth.

"Goldman Sachs cut its forecast to 3.5% from 5.25%, Oxford Economics revised its call to 2.7% from 6.5%, and Morgan Stanley lowered its estimate to 2.9% from 6.5%. That's as the Atlanta Fed's GDPNow model predicts 3.7% for the quarter, down from 5.3% at the start of the month," Beilfuss wrote in Barron's.

Economists aren't the only ones revising expectations. Some companies have cautioned that their revenue and earnings expectations were too high. Several airlines reported that cancellations have increased and ticket purchases have declined, which will impact the companies' financial performance. In addition, some manufacturers indicated that unresolved supply chain issues and the high cost of raw materials will affect their performance for the quarter, reported Yacob Reyes and Sam Ro of Axios.

A chief investment officer cited by Axios said it's unlikely that many more companies will cut their revenue or earnings forecasts; however, "…he does expect fewer companies to announce better-than-expected earnings when they announce Q3 results." During the second quarter of 2021, 87 percent of companies in the Standard & Poor's 500 Index reported better-than-expected earnings.

Last week, major U.S. stock indices trended lower, reported Al Root of Barron's. The yield on 10-year Treasuries also finished the week higher.

News Media Interview Contact
Name: Greg Womack, CFP
Title: President
Group: Womack Investment Advisers
Dateline: Edmond, OK United States
Direct Phone: 405-340-1717
Jump To Greg Womack -- Oklahoma Financial Advisor Jump To Greg Womack -- Oklahoma Financial Advisor
Contact Click to Contact
Other experts on these topics