Fall’s Economic Comeback Turns Into a September Slowdown

The U.S. economy is facing a slowdown in September, rather than the takeoff once hoped for.

Earlier this summer, many economists saw the week of Labor Day as the moment when the economic recovery would kick into high gear. Their expectation was that widespread vaccination would ease labor shortages. Schools and offices would reopen, which would mean a comeback for local businesses reliant on office workers. Travel would rebound. Stevie Nicks would be back on tour.

Instead, the rise of Covid’s Delta variant has the nation tapping the brakes.

Businesses and consumers are reworking plans to adjust to renewed mask mandates, travel restrictions, event cancellations and delayed office reopenings.Consumers are pulling back on purchases and employers have slowed hiring. Economists are downgrading their forecasts. Stevie Nicks canceled.

Economists don’t expect the variant to push the U.S. back into recession. But the loss of steam could prolong the recovery of the millions of jobs lost during the pandemic, leave many on the labor market’s sidelines and continue to hobble businesses unable to grow or unwilling to invest amid fresh uncertainty. At the same time, that dampening effect could ease inflation pressures if it reduces consumer demand.