The virus’s toll on the U.S. economy is projected to ease

Over the last few weeks, several economists had lowered their forecasts for third-quarter economic growth in large part because consumers slowed spending on meals out, hotels and airline tickets amid the spread of the highly contagious Delta variant. The COVID-19 surge also complicated office and school reopenings, turning what had been expected to be a September vroom into a downturn.

Though the U.S. is vulnerable to the evolving pandemic landscape and potential new variants, each wave of rising COVID cases appears to pose less of an economic threat.

The economic drag from the Delta variant was less severe than previous virus surges, many economists say. Most American adults are now vaccinated, helping consumers feel more at ease. Further, most businesses are operating without capacity restrictions.

One wild card in the dynamic, however, is continued supply constraints such as backups at U.S. ports and overseas manufacturing disruptions that have persisted. The Fed and economists expect them to ease gradually.

Also in the news was Treasury Secretary Janet Yellen, who said that the U.S. Treasury could exhaust its cash reserves by October 18 if the debt limit isn’t raised. Ms. Yellen said the U.S. “would likely face a financial crisis and economic recession” if the Treasury can’t repay bondholders as debts mature.

For the week, the three bellwethers ended the week with synchronised, lossed. Dow moved down 1.36%. The S&P 500 lost 2.21% this week, while the tech-heavy Nasdaq lost a hefty 3.20%.