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Delta Variant is Knee-Capping the Recovery

The University of Michigan’s Consumer Sentiment Index tanks, suggesting a slower economic recovery….

By Paul Marszalek

Radio stations expecting a revenue surge in the fourth quarter might want to pump the brakes and adjust expectations.

Things were looking pretty good until the Delta Variant teamed up with the anti-vax crowd to create a surge in infections. That surge, in turn, has consumers collectively bumming out.

There is no mistaking the data. The University of Michigan Consumer Sentiment Index cratered to 70.1 in August from 81.2 in July. It’s the lowest reading since 2011.

Retail sales, reported Tuesday, dipped 1.1% from June to July — worse than expectations. While much of the drop is due to lackluster car sales (a semiconductor shortage is keeping inventory low), a broad swath of categories declined.

The good news is that the index of consumer sentiment is just that — a measure of emotion, and it doesn’t always correspond with downturns. There is significant pent-up demand for goods and services. Further, economic swings can be regional, and areas with higher vaccination rates might fare better.

On the other hand, major outbreaks in schools, for example, could stop the recovery in its tracks. Plan accordingly.

(Main Page concert photo by Hanny Naibaho on Unsplash)

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