US economic recovery from COVID-19 has slowed, OECD says

The U.S. economy is losing momentum in its recovery from the coronavirus pandemic, the Organization of Economic Cooperation and Development said Tuesday.

The Paris-based organization forecast that U.S. gross domestic product — the broadest measure of goods and services produced by a nation — would grow 6% in 2021. That's down nearly 1 percentage point from May, when the OECD predicted GDP would grow 6.9% this year. 

By comparison, GDP contracted at a 3.5% annualized rate in 2020, when the economy came to a near standstill to slow the spread of COVID-19. The virus has infected more than 42 million Americans and killed over 674,000. 

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Although the economy gained steam in the spring amid widespread vaccinations and easing business restrictions, the spread of the highly contagious delta variant over the summer has since dampened growth, the OECD said. 

"High numbers of infections are still occurring due to the spread of the more transmissible delta variant, and there are marked differences in the pace of vaccinations and the scope for policy support across countries," the organization said. "The delta variant has so far had a relatively mild economic impact in countries with high vaccination rates, but there are signs that it may weigh on confidence and lower near-term growth momentum." 

There are other signs of slowing momentum: Retail sales softened in July, and global car sales have also plummeted. On top of that, industrial production and global merchandise trade growth have moderated, due in large part to pandemic-induced supply shortages in key sectors, such as semi-conductors and shipping. Rising supplier delivery times have also held back output in some industries, notably auto production.

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"A key near-term uncertainty is the extent to which the delta variant raises risks of persisting shutdowns in some Asian economies, with adverse downstream consequences for the availability of supplies and the pace of the global recovery," the group said.

While the U.S. was making solid progress with vaccinations — 76.5% of adults have received at least one shot, according to the Centers for Disease Control and Prevention — and infections began falling, cases rebounded over the summer as the highly contagious delta variant spread largely among the unvaccinated population.  

The U.S. is averaging about 140,000 new COVID-19 cases per day with roughly 1,000 deaths, according to CDC data.

Although breakthrough infections in vaccinated people occur, they tend to be far less dangerous.