While much of the U.S. economy has enjoyed a rebound in recent months, there are worrying signs that the COVID-19 delta variant might be having a negative impact on small businesses and hourly workers.
The number of employees working declined 4% in mid-August versus mid-July, CNBC reported on Wednesday, citing data from Homebase, which analyzed trends among about 60,000 businesses and 1 million hourly employees. The number of businesses with their doors open fell 2.5% during the same period.
Those numbers mark a reversal from previous trajectories, which suggests that the delta variant is having a negative impact on certain parts of an otherwise recovering economy.
“The leading indicators here of Main Street health and hourly employment are showing a real change from the trends earlier in the summer, and what seems to be a very clear impact of the delta variant on the economy,” Homebase CEO John Waldmann told CNBC.
The delta variant can impact employees and businesses in a few ways, he said — including by contributing to a decline in consumer foot traffic, which has led some businesses to reduce staff or temporarily close their doors.
Homebase found that all states except Arizona, Maine and South Dakota saw an employment decline in August, as measured by the number of hourly workers with at least one clock-in. The Southeast experienced the biggest dip at 5.6%, more than double the 2.3% drop in New England.
Homebase’s analysis took place after a fairly upbeat second quarter. As GOBankingRates reported last week, the U.S. Gross Domestic Product rose at an annual rate of 6.6% during Q2, according to data from the Bureau of Labor Statistics. That was slightly higher than most economist projections.
But even as that report came out, analysts had already begun scaling back their forecasts in light of the delta variant. Goldman Sachs slashed its third-quarter growth forecast from 9% to 5.5%, citing delta variant concerns. Similarly, Wells Fargo economists downgraded their third quarter GDP forecast from an 8.8% annual rate to 6.8%, also due to COVID-19 cases surges.
Covid cases, hospitalizations and deaths rose steadily through July and August, fueled by the delta variant and largely involving unvaccinated Americans. By the end of August, there were an estimated 150,000 new COVID cases a day on average, according to the Centers for Disease Control and Prevention. That was up from roughly 14,000 on July 1. However, new cases seem to have leveled off in recent days.
Meanwhile, consumer confidence fell to a six-month low in August, partly on virus fears. In July, the Conference Board’s consumer confidence index had been at its highest level since the initial coronavirus outbreak in early 2020.
“The emergence of the delta variant has cast a shadow on that optimism, creating a growing recognition that the risk presented by COVID-19 is not yet in the rear-view mirror,” Jim Baird, certified financial planner and chief investment officer at Plante Moran Financial Advisors in Kalamazoo, Michigan, told CNBC.
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