As Delta variants subvert forecasts, US business sentiment darkens


Coronavirus economic impact update

The failure of the United States to control Covid-19 cases is disrupting business expectations for a rapid economic recovery, forcing companies to re-plan and revise their forecasts while struggling to cope with the new federal vaccine authorization.

According to data from the Economic Innovation Group, in the past three weeks, a quarter of small businesses in the United States have experienced a decline in income, while only 8% of small businesses have increased in income. LearnAn increasing number of people now expect the full recovery of the economy to take more than six months.

Nationwide Largest airline The slowdown in demand was revealed this week as cases of the highly contagious Delta variant climbed. United Airlines controlled the capacity plans for Thanksgiving and Christmas holidays, and American Airlines and Delta Air Lines had lower-than-expected revenues for the quarter.

As the executives dispersed at the investor meeting after Labor Day, some people said that the Delta variant injected uncertainty and volatility into their forecasts.

“We did not provide guidance [2021] Because there is so much uncertainty,” Craig Menear, Chairman and CEO of Home Depot, said at an investor event. “How this Delta variant will work is unknown. ”

MGM Resorts said it has seen more midweek business trip cancellations, while Estée Lauder’s chief financial officer Travis Travis said at the Barclays meeting that the slowdown in its first-quarter forecast was “mainly [due to] Delta variant”.

When an analyst asked about the disruptions that rail operator CSX has faced in recent weeks, from the delta surge to the hurricane to the supply chain dislocation, its CEO James Foote replied: “Well, I’m waiting for meteors and locusts to come. Then we can discuss the situation in the fourth quarter.”

Similar uncertainty prompts Microsoft This week indefinitely postponed bringing employees back to their US offices, joining the ranks of large employers, and postponed the reopening of their offices to their original Labor Day goals.

John Butters, senior earnings analyst at FactSet, said that between the second and third quarters, the number of S&P 500 companies that lowered their earnings expectations increased from 37 to 47, although he emphasized that this is still less than five years. Average.

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Oleg Melentyev, a securities credit strategist at Bank of America, said the economy is still firmly in recovery mode, but a more cautious sentiment has led to a “major reassessment” of growth prospects.

He said: “Throughout the summer, people’s expectations have shifted from a full reopening that led to a strong and sustained recovery to a prospect that now appears to be slow and uneven.”

Morning Consult economic analyst Jesse Wheeler (Jesse Wheeler) said that since the beginning of July, consumer confidence has “substantially fallen”, giving up most of this year’s gains and returning to February levels.

He said: “We can confidently say that the Delta variant is the key driver, because the beginning of the decline in confidence is exactly the same as the recent surge in cases.”

Although the polling company saw some improvement last week, the percentage of employees who said they were uncomfortable returning to the office Skipped 9% to 43%.

As confidence reverses, the Biden administration hopes that through mandatory vaccination or weekly testing of 80 million private-sector employees, will accelerate the economic reopening before they can return to the workplace.

President Joe Biden’s announcement on Thursday was welcomed by several industry groups representing large employers, who viewed vaccines and testing as a means to protect employees, and have threatened to fine companies that require vaccinations by some Republican governors. Occasionally, hope to obtain clearer federal guidance.

However, it is expected to be resisted by some small companies. The National Association of Manufacturers stated that vaccinating all Americans is an “economic priority”, but cautions against “unreasonable compliance costs” for employers.


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