U.S. Labor Secretary Marty Walsh made waves last week when he said in an interview that the U.S. economy is at a “fragile point” as the result of the rising threat of the Covid delta variant and swirling employment issues.
“[We] can’t let this get out of control,”he told Yahoo Finance. “We’re at a certain fragile point in our economy right now. Things are moving in the right direction. People are traveling. Tourism is picking up. Manufacturing is happening. Job growth is happening — and to have it go backwards would be tough.”
The good news: This “fragile point” is the result of some recent strength.
July marked one of the most successful months for employment in recent memory, as non-farm payrolls rose by 943,000 and the unemployment rate fell to 5.4%. Good news, right? And it exceeded expectations.
The bad news: You’ve heard of the Covid-19 delta variant, I’m sure. But what about lambda?
Flagged by the World Health Organization as a “variant of interest,” lambda first emerged in Peru and has spread worldwide since late 2020. It’s more easily spread, more severe and more resistant to today’s vaccines than even delta. Fun.
Not only are there fears that the delta variant will slow the improving economic recovery, but lambda could be even worse on that front, further sidelining workers and businesses. Some companies are even slowing the return to work and instituting new mask and vaccine mandates.
Not good news.
My take: Look, the U.S. economy is resilient. We survived the last 18+ months not because of our can-do spirit but because of the fact that the economy is diversified enough to weather a storm in a few sectors without bottoming out. No matter what Covid throws at us, we will find a way through. But the concern is that, having used up all of its rescue measures and prevention measures in 2020, the U.S. doesn’t have much left in its arsenal to combat this latest wave. And we won’t know what’s coming until it gets here.