Washington (AFP)

Now that the initial effect of vaccination has worn off and government aid to Americans dries up, the Delta variant is casting a growing shadow over the economic recovery in the United States.

Americans consumed much less than expected in July.

Their spending was down 1.1% from June, according to figures released Tuesday by the Commerce Department.

This data is important to assess the health of the world's largest economy, because consumer spending represents three quarters of GDP and is the engine of growth.

"People have eaten a lot in restaurants and bought electronic devices and appliances, but that's it," says economist Joel Naroff.

Certainly, automobile production, still strongly slowed down because of semiconductor shortages, which are causing new car sales to plummet, weighed heavily.

But purchases of clothing, as well as construction and gardening equipment, are also on the decline.

On the other hand, gas stations are doing well, but it is thanks to the increase in the price of fuel for months.

- End of aid -

The economy had rebounded strongly in the spring, when the vaccination campaign had made it possible to revive without too many scruples indoor restaurants and bars, air travel, and hotel vacations.

This spending had been supported by government checks paid in March and April, and by the still generous unemployment benefits granted to millions of unemployed, and extended.

But these are gradually being phased out.

This is already the case in half of the states, before the whole country at the beginning of September.

And it is now the Delta variant that threatens to slow the recovery, and could take the US economy "from very rapid growth to just rapid growth," Jason Furman, former economic adviser to the AFP, told AFP. President Barack Obama and professor at Harvard.

"I think it will affect the economy, but not to the point where growth will be negative again, or lose jobs again," he said, however.

The Delta variant "began to affect (...) restaurants and air travel at the end of July," according to economist Ian Shepherdson of Pantheon Macroeconomics.

And he anticipates even stronger consequences in August, now counting on a 3% increase in consumer spending in the third quarter, against 6% previously anticipated.

- What about the Fed -

The resurgence of the virus could prevent schools from reopening, slow down the return to work, or even force restaurants and businesses to decrease their activity again.

"Is the economy slowing down? Yes. Is that a surprise? No. Is there any cause for concern? Not yet. The big problem facing the economy, again, is the virus. This undermines consumer confidence, "said Joel Naroff.

They had indeed believed, in the spring, the near end of the pandemic.

As a result, their confidence plummeted in early August, even dropping to its lowest level in nearly a decade, according to the index measured by the University of Michigan.

The distribution giant Walmart, which unveiled better than expected quarterly results on Tuesday and even raised its growth forecasts for 2021, however indicated that it was monitoring the rise of the Delta variant.

At the end of July, the group, number one in the sector in the United States, announced the reimposition of the mask in areas where the coronavirus is virulent, and also forced employees at its headquarters to be vaccinated before October 4.

“Interestingly, these negative figures come just as the Fed plans to announce its intention to reduce its asset purchases,” notes Joel Naroff.

The American Central Bank could indeed, from September, announce the pace at which it plans to gradually slow down its support to the economy.

© 2021 AFP