San Francisco, Frankfurt After a boom in the summer months, companies in the USA are now preparing for a much more difficult phase. Since the pandemic with the highly contagious Delta variant is still raging in many parts of the country, many companies have to dampen their expectations of a quick economic recovery and adjust their plans accordingly.
In addition, new guidelines for vaccination are added from Washington. US President Joe Biden demands that companies with 100 or more employees require their employees to vaccinate. Details are still being worked out.
This is a major damper for the mood in the USA. In the spring, most companies and analysts were still assuming the economy would open fully and thus a rapid recovery. Now it is clear, however, that expectations were too optimistic. A number of US economists had recently cut their growth forecasts. The experts at Goldman Sachs are only assuming an increase of 5.5 percent for the third quarter. Originally, they expected growth of nine percent.
The largest airlines have already prepared investors for difficult times last week. United Airlines has reduced capacities around Thanksgiving and Christmas, which are actually the most important travel times for families in the USA. Delta Airlines expects lower sales in the current quarter. This is also due to the fact that business travel has not picked up as strongly as the airline bosses had initially hoped.
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A number of large corporations, including Apple, Google, Wells Fargo and Microsoft, have postponed their return to the office planned for September, many of them until the coming year. Microsoft was the first large company to even speak out in favor of home office for an unlimited period of time because no forecasts are possible in view of the Corona situation.
Some large employers welcomed Biden’s vaccination push
This also has an impact on business trips. “Instead of increasing growth, we are seeing a break,” admitted the CEO of Delta Airlines, Ed Bastian, in the “Wall Street Journal”. With the days of summer vacation over, he’d hoped the managers would now drive bookings. So far, business travel has reached 40 percent of its pre-crisis level and should increase to 60 percent in September. “But it won’t be 60 percent,” said the Delta boss.
Craig Menear, CEO of the home improvement chain Home Depot, completely refrained from providing analysts with quarterly forecasts for this year. “There is just too much uncertainty,” he clarified.
Biden wants to fight the crisis of confidence with a controversial vaccination requirement. He calls for vaccinations or weekly tests for 80 million private sector employees. A number of large employers welcomed Biden’s move. But it is precisely from the Republicans that there has been severe criticism. Some governors have announced that they will be suing the government. Arizona Republican governor Doug Ducey condemned Biden’s approach as “dictatorial.”
If the US president has his way, the economy will face further challenges in the future. Last week, Biden gave details of the energy transition he was calling for: According to this, the USA should generate almost half (44 percent) of electricity from solar energy by 2050. At the moment it is just 3 percent. To achieve this, the United States would have to radically change its current energy supply, because the majority of the country’s electricity needs are now covered by fossil fuels.
US could save $ 1.7 trillion through investments
The transition is also associated with high costs: by 2050, additional spending of up to $ 0.56 trillion could be incurred, according to a report by the Department of Energy. The state, consumers and the economy would have to pay for these costs. The country would have to invest massively in new technologies, and the energy industry would have to fundamentally reposition itself, as the existing infrastructure for generating and distributing electricity is entirely based on fossil fuels.
But at the same time, the report said, the US would save $ 1.7 trillion through cleaner air, lower healthcare costs and reduced impacts of climate change. The then growing solar industry could also create new jobs: Depending on the scenario, the number of employees in the sector would increase from currently 230,000 to 0.5 to 1.5 million people by 2035.
Whether Biden can get through that in deeply divided Washington, however, is questionable. The democrat is at least launching a debate about how the energy transition that he had promised to the citizens in the election campaign could look like in concrete terms.
The uncertain mood has also made itself felt on the stock markets. The broad S&P 500 lost around 1.6 percent last week. The leading Dow Jones index fell on Friday to its lowest level since the end of July.
More: The delta variant is shaking governments around the world