Spending on airline travel slowed in July as the Delta variant spread, according to new data.
July consumer credit card data analyzed by JPMorgan Chase shows spending on air travel fell by a whopping 20 percent in late July as cases of COVID-19 rose around the world, including in the US.
“Airline spending has fallen almost 20 percent from a recent peak in mid-July, a larger decline than during the severe winter COVID wave, when spending was at much lower levels,” JPMorgan Chase economist Jesse Edgerton wrote in a research note.
That supports federal data showing that the number of people who passed through US airports was down 4 percent in the week of July 19 compared to the prior week — representing the first weekly percentage drop since April, according to the Transportation Security Administration.
Spending on restaurants also softened last month, albeit by a more modest 2.5 percent, according to JPMorgan’s report.
But Edgerton’s report also predicts that consumer spending will return to normal in a short period because the US appears to be mirroring the United Kingdom’s experience with the Delta variant, in which cases peak after three weeks and begin to subside.
“My guess is that the wave will end in a month or two … and this will end up looking like a short lived drag on spending and economic activity,” Edgerton said in an interview.
States that were first hit hard by the variant — Missouri, Arkansas and Nevada — are now seeing some of the slowest rates of new infections, and Louisiana, where the outbreak was worst, may already have peaked, according to Edgerton’s research.
The surge in airline travel kicked off in March as spring breakers took to the skies in droves. Travel ratcheted higher in the ensuing months as more Americans gained access to COVID-19 vaccinations.
But the rapid spread of the highly contagious Delta variant, which has reignited a debate about face masks, appears to have given some Americans pause about flying. Airline stocks took a beating in July on concerns about the Delta variant — and investors’ fears now appear to have been well-founded.
In July, Delta chief executive Ed Bastian told CNBC’s “Squawk Box,” “Demand has stalled as the virus has grown, particularly down here in the South, across the Sun Belt, coupled with the quarantine measures that are going in place in many of the Northern states. Those two factors are causing consumers to pause.”
Bank of America also chimed in, confirming that “the 2-year growth rate of air travel peaked four weeks ago and has taken a turn lower, potentially reflecting the risks from the Delta variant,” according to an Axios report.
This article originally appeared on New York Post