Administration officials are watching to see the trajectory of that decision. If Britain’s reopening continues without a new wave of hospitalizations and lockdowns, America’s recovery could prove more likely to remain on course, officials believe. But if the U.K. cannot safely reopen its economy because the delta variant spreads too rapidly, the United States — which has vaccinated a smaller percentage of its population — may face similar head winds. The people spoke on the condition of anonymity because they weren’t authorized to reveal the discussions.
After rising steadily, cases fell last week by about 15 percent, U.K. health officials said Sunday. They still remain more than 10 times their level from much of May and April and it’s unclear if they will continue to contract.
Their analysis comes at a crucial time in the government’s response to the pandemic. More than 400,000 Americans sought jobless benefits in the government’s most recent weekly data tally, an increase from the prior week that caught some economists by surprise.
Some local governments are wrestling with whether to reimpose mask mandates even for vaccinated individuals because of a sharp uptick in cases in the United States. The Centers for Disease Control and Prevention has not made a blanket recommendation as government officials increasingly plead with unvaccinated Americans to get the shot as soon as possible. Some are fearful that the virus could pick up even more velocity in the fall and winter.
Precise economic comparisons are hard to draw between the United States and Britain because their economies are so different. Also, the British government’s furlough programs measure jobless levels very differently from the United States’ unemployment system, two of the people said.
So far, however, Biden officials are encouraged by the hospitalization and mortality rates in the U.K., which have stayed relatively low even as case rates have soared. That diminishes the already remote possibility of business and school closures similar to the kind that upended daily life across the country last year.
Some senior administration officials also do not believe there is the public appetite for these kinds of lockdowns, or the will among local governments necessary to implement them.
Still, concerns have mounted internally over how the spread of the variant could impact parts of the economy, particularly if it fuels a sense of uncertainty that drags down spending and growth overall. For instance, some Biden administration officials fear that the virus could deepen the wave of early retirements among older American workers — a pandemic trend they have hoped would be reversed by the economic recovery. Perhaps just as troubling, the people said, is the prospect of parents who pull themselves out of the labor market because they stay home due to fears about the safety of sending their children to school. That could create severe new hardships for millions of American families, in addition to lowering overall employment and exacerbating claims of a national labor shortage.
The officials stressed they do not believe these adverse outcomes have yet materialized but worry they may develop later this year.
The White House has emphasized the progress the administration has made in vaccinating the American public, with the elderly in particular vaccinated at very high rates. One White House official dismissed the connection to the U.K. as tenuous and said there had been no major discussions comparing its situation to that of the United States.
The official also disputed the characterization that the administration’s concerns about the delta variant’s economic impact have intensified, saying there has been no significant effect so far and if there is one, it is likely to be primarily limited to areas with low vaccination rates.
White House officials have also said they are redoubling their vaccination efforts, pointing out that three states with poor vaccination rates accounted for 40 percent of new covid-19 cases this week. Some evidence suggests the delta variant may be spurring more Americans to get vaccinated as well, with Alabama Gov. Kay Ivey (R) saying “it’s time to start blaming the unvaccinated folks” for the increase.
“Our country and our economy are in a much stronger place than we were in January 2021 because of the President’s success in vaccinating more than two-thirds of American adults, helping create three million jobs in five months, and spurring on the fastest growth in almost four decades,” White House spokesman Michael Gwin said in a statement. “We’ve always said that there were going to be challenges along the way, but the work we’ve done has put us in a strong position to weather any storm and keep our economy booming.”
The concerns about the delta variant’s economic impacts come amid a wider debate among senior Biden officials over how to respond, with White House officials debating whether to push for Americans to again wear masks.
The road taken by Johnson’s government represents one potential path. Up to this point, economists say, Britain’s vaccination efforts appear to be largely blunting the economic damage caused by the virus. British financial markets are holding firm. The housing market continues to boom. Most analysts still project a sharp economic rebound in the U.K.
But some worrying tremors are emerging from across the Atlantic. A contract-tracing app has in recent days told as many as 600,000 people in England and Wales to quarantine after possible exposure — a rule that for now applies to even those who have been fully vaccinated.
That could prove a key difference with the United States, which does not have as wide-reaching an alert system or as strict quarantine rules.
Restaurant, bars and food delivery in Britain “have been disrupted,” said Mark Zandi, chief economist at Moody’s Analytics. The variant is already causing a drop in consumer activity, with Google’s “Mobility Index” for retail and workplaces showing declines since the spread of the delta variant intensified in Britain, starting in early June.
Already, the “rising wave of virus infections … subdued consumer demand, disrupted supply chains, and cast a darkening shadow over the outlook,” Chris Williamson, chief business economist at IHS Markit, told Bloomberg.
“I have not seen any impact in the macro economic data yet. … They seem to be managing through this reasonably gracefully for now,” said Zandi, one of the independent economists most frequently cited by the White House. “But the U.K. is the canary in the coal mine. We’ll see how well they do — because if they struggle, we soon will.”
The parallels between the governments are not exact, and the Biden administration has expressed confidence in its public health measures and the amount of funding that remains from the $1.9 trillion American Rescue Plan. Anthony S. Fauci, the White House’s chief medical adviser, stressed on Thursday that a surge in covid cases has not led to a surge in hospitalizations in Britain.
Many economists still remain confident in projections showing the U.S. economy will grow at a very rapid clip this year. Nonpartisan and Wall Street analysts have said the economy could expand this year by more than 7 percent — one of the fastest paces in decades.
“At the moment, investors are primed for the strongest economic growth from any recession in history. They have not altered that view,” said Chris Rupkey, chief financial economist at MUFG Union Bank. “Nobody is rushing to judgment here on whether the delta variant will cause a new shutdown. … Even in [Los Angeles], you walk the streets and can’t see any reduction in economic activity around you.”
Still, Ashish K. Jha, dean of the Brown University School of Public Health, pointed out British hospitals are likely to begin filling up again with covid patients, despite having better vaccination rates than the United States.
The strain on hospitals will eventually put enormous pressure on Johnson to institute new curbs on bars, restaurants and other activities, Jha said. This, potentially adding on to what Johnson had already also announced in recent days: Starting in the fall, those who are not fully vaccinated would not be allowed entry into nightclubs and other crowded venues.
Jha stressed that the same scenario is likely to arrive in America, particularly in states with low vaccination rates, such as Missouri and Alabama. He said hospitalization rates are also likely to rise in places with high vaccination rates, such as Massachusetts — where more than 80 percent of the population is vaccinated — but will probably not stress hospital capacity.
The United States, Jha said, will almost certainly face the same steep rise in caseload facing Britain — just one or two months later. Complicating matters is evidence suggesting immunity from covid begins waning starting six months after the shot was initially given, and the timeline for rolling out booster shots remains unclear. Jha pointed out many American seniors first received the vaccine in January — meaning their immunity will diminish as the variant ramps up.
“The data from both Israel and the U.K. — which both started seeing delta before we did — suggests the next month or two will be very difficult in the U.S., with a lot more infections and a lot more hospitalizations,” Jha said, “and real potential for disruption of things we have just started getting back after the pandemic.”