COVID Hasn't Gone Anywhere, Which Makes Me Very Wary

The quickest way to run out of time is to think you have enough of it.― Stewart Stafford The COVID-19 pandemic is not as front and center in 2021 as it was in 2020. While still a constant news topic, we no longer have the daily death counts scrolling across the bottom of CNN broadcasts. But that doesn't mean the coronavirus has gone away. Indeed, according to Johns Hopkins, the nation last week had recorded more official deaths from coronavirus so far in 2021 than in all of 2020. September was a particularly bad month thanks to the Delta variant. The country recorded just over 58,000 casualties last month from the virus. That is two and a half times more than the approximate 23,000 fatalities recorded during the same month in 2020. Fortunately, cases have fallen from their peak and hopefully this trend sticks, for once. It is hard to believe last month's death toll considering that we now have several approved vaccines and almost 60% of the country is vaccinated. Add in the 15% to 20% of the U.S. population that has had and recovered from the virus and should have natural immunity now. We have long since passed the levels of what the experts stated would constitute herd immunity when this outbreak commenced. I have a theory on why that is. However, it is not relevant to a financial site. What is pertinent is the significant impact that COVID still has on the economy and the markets. Investors seem to have taken their eyes off this threat. You could see these effects in the lousy jobs report on Friday. Jobs created in September came in at just 194,000. This was far below the consensus expectation of 500,000 positions filled and easily was the worst month for job growth so far in 2021. The biggest contributor to the jobs miss came from the educational sector, as we still haven't come to a consensus on how to safely reopen schools. I would think new vaccine mandates in places such as Los Angeles, New York City and San Francisco played a role as well. I mean, if you are a small business owner, would you be hiring in front of these restrictions without knowing how they might impact your customer demand? This is especially true in sectors such as hospitality and restaurants. I expect in the coming months the jobs reports also will be impacted by large employers such as American Airlines instituting their own vaccine mandates as conditions of employment. Many individuals will separate from employers rather than comply and we already have seen large health systems fire hundreds of employees thanks to these policies. Negative impacts to the economy from this trend are likely. Just this weekend, there apparently was a sickout in response to a company vaccine mandate at Jacksonville International Airport that led to the cancellation of more than 1,800 Southwest Airlines flights. Add to this mix the continued massive disruptions in the global supply chain as well as surging prices; oil went over $80 a barrel last week for the first time in seven years and aluminum prices hit 13-year highs last week. All these factors make me think projections for fourth-quarter GDP growth will continue to come down in the coming weeks. At present, the GDP consensus growth estimate stands at around 5.5% for the final quarter of the year. Now consider what happened regarding third-quarter estimates. The Atlanta Federal Reserve last week downgraded its GDP growth estimate for the third quarter to 1.3%; its estimate was 6.1% in late July, and is one example of how enthusiasm about growth dissipated over last quarter. The same theme seems destined to play out this quarter. Falling growth projections probably won't buoy investment sentiment, although they might reduce the Federal Reserve's plans to taper on the margin. Regardless, the continuing impact from COVID-19 months into the pandemic is just one more reason I remain cautious on the markets.

COVID Hasn't Gone Anywhere, Which Makes Me Very Wary

The virus may not dominate the headlines at this point, but its impact continues to be felt on the employment and economic fronts.

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