From Washington Post:
The unusually contagious delta coronavirus variant, first found in India, could become the dominant strain in the United States this summer, Centers for Disease Control and Prevention director Rochelle Walensky said Friday.
The President has stated a new lockdown is unlikely, but even if there is no new Federal measure, risk aversion on the part of the vulnerable might slow economic activity. (Of course, those who actively resist getting vaccinated might not be risk averse, and just go on about their business, mitigating this effect). Since vaccination rates are variable, the impact would likely be geographically concentrated.
As Ashish Jha, Dean of Brown’s school of public health, noted in NYT:
“People who have been vaccinated still do quite well against this variant,” Dr. Jha said, “but it is one where you need a high degree of immunity to ward off, so you really need to have both of your doses of your vaccine.”
Below, I show a map of fully vaccinated rates.
Source: Mayo Clinic.
Yellow states have full vaccination rates below 40%. As indicated in this article, cases can surge even with higher than 40% vaccination rates (as in Kansas, in addition to Missouri).
The GDP accounted for by these states with less than 40% state population vaccinated is 28.6% of total US GDP in 2019Q4 (the NBER business cycle peak quarter).
The S&P 500 dropped 1.3% on Friday; many accounts attributed the drop to Fed statements indicating an accelerated pace of rate hikes (especially Bullard’s comment), presumably in response to prospects for higher than previously anticipated inflation. Interestingly, market indicators on Friday are not supportive of that interpretation.
Employment numbers for May were released for today.
Today we are pleased to present a guest contribution written by Roland Beck, Virginia di Nino and Livio Stracca (all at the European Central Bank). The views expressed belong to the authors and are not necessarily shared by the institutions to which the authors are affiliated.
The FOMC has upped its expectations of PCE inflation [Politico] [CR]. Here’s latest available CPI inflation expectations.
Industrial production was released yesterday, along with retail sales.
Juan E. Castañeda (Director) and Tim Congdon (Chairman) of the Institute for International Monetary Research at the University of Buckingham write today:
A lot of chatter about a sugar high coming from the passage of the American Rescue Plan, previous fiscal and monetary measures, combined with the increase in CPI inflation. Time to step back and assess.
Using (roughly) the Burns-Mitchell-NBER approach. Incomplete listing, focused on those updated over time, by agencies, firms, or other organizations.
Remember this Kevin Hassett projection of Covid-19 deaths, from May 2020?