Delta variant slows economic activity in July, but not greatly

I am always looking for data that can tell us how things are at this moment. Two indicators come to mind: initial Unemployment Insurance (UI) claims through California’s Employment Development Department, and Consumer Spending data from Affinity Solutions/Opportunity Insights. Both provide data for July which show that the Delta variant has, so far, had a minor but significant impact on economic activity.

What does “minor but significant” even mean? It means numbers are, for the first time in a while, worsening instead of improving. But they are not worsening by a lot.

Initial UI claims in San Bernardino County are at a 4-week average of 7,510, which is up slightly from the previous week’s 4-week average of 7,370. It’s important to take a 4-week average with these numbers because of their variability. Riverside County follows similar trends.

Out here, the uptick in initial UI claims is a change. For a while now, these statistics have slowly but steadily trended downward. It’s just 1 week of data, but I will make a note to track it and update you, if necessary, later this month.

There was a similar pattern in the consumer spending data from Affinity Solutions, again for San Bernardino County. Back in June when I reported on initial UI claims, I mentioned the skyrocketing spending patterns we were seeing in May, especially late-May, when vaccine rollout and low case rates were raising consumer confidence. But recently, consumption spending has declined – see the figure below; it’s at 6.7% today but was close to 20% back in early-June. While these are percent changes relative to January 2020, the fact that the time series has trended downward from the same fixed point of a month ago suggests consumers might have become more cautious again. But because of the high variability, this will be another one to track through August.

The Inland Empire’s unemployment rate in June was at 7.9%, which now sits uncomfortably but only slightly above the state’s 7.7% rate. Hopefully these are all just hiccups in an otherwise excellent summer recovery, but only time will tell.