Uncertainty is again on Principal Avenue as delta variant rattles reopening

The rise of the delta variant, a highly contagious strain of Covid-19, is disrupting reopening plans across the country and introducing even more uncertainty on Main Street. Nearly six in 10 small business owners in the latest CNBC | Momentive Small Business Survey say the new threat is making them shift their business outlook for the rest of 2021.

Overall small business confidence, as measured in the survey of more than 2,000 small business owners conducted July 26 – August 3, remains underwater at a score of 45 out of 100, well below its pre-pandemic level of 61 in the first quarter of 2020. That score is unchanged from last quarter’s survey, when daily Covid-19 case rates were about half of what they are now.

The new wave of Covid rushing across the country is leading to increases in the hospitalization rates and death rates nationwide, but especially in areas with lower vaccination rates. Some hospitals are as overburdened now as they were in April of last year, when Covid-19 was first spreading in the U.S.

This is happening just as American society was beginning to fully return to its pre-pandemic routines. A Gallup poll conducted in June, before the delta variant wave surged, found that two-thirds of adults in the U.S. said their lives are either “somewhat” or “completely” back to normal, up from 37% last fall. 

Delta disrupts a total return to normal

Small businesses have learned how to get by in this environment. Restaurants pivoted to carry-out instead of dine-in, brick-and-mortar retailers invested in creating online storefronts, and gyms began offering virtual workouts. 

After a year and a half’s experience adapting to these ever-changing circumstances, 66% of small business owners in the latest CNBC | Momentive poll say they can continue operating for more than a year under current business conditions — unchanged from three months prior. 

One significant advantage now relative to earlier phases of the pandemic is that few cities and states are resorting to full-scale shutdowns or curfews to manage the increase in cases. That means the restaurants, hair salons, and shops that rely on in-person foot traffic can continue to keep their doors open. 

Barbers Roni Baba and Michael Nasimov cut hair with a protective face masks between plastic separations as phase two reopening continues during the outbreak of the coronavirus disease (COVID-19) at Joseph Hair Salon in Port Washington, New York, June 11, 2020.

Shannon Stapleton | Reuters

So far, consumers are happy to return to their pre-pandemic lives. In a new Washington Post-Schar School poll, 76% of people say they’ve eaten indoors at a restaurant, 74% have visited a doctor or dentist’s office, and 55% have gotten a haircut in a barber shop or hair salon within the past three months.  

While most small businesses have been coping, and some even thriving in this new environment, there are still many who are holding out hope for a return to their 2019 “business as usual.” 

Just about half of small business owners in the arts, entertainment, and recreation industry (48%) say they can continue to survive for another year given current business conditions — the lowest of any industry. These are some of the businesses caught in the crosshairs of the delta variant. 

While many people had been excited to return to concerts, clubs, and more frivolous activities this summer and fall, the sharp rise in Covid-19 cases is forcing the cancellation of some of those long-delayed reopening plans. After a year without concerts, baseball games, and daily commutes into the office, many people are realizing they can continue to structure their lives differently than they had before. 

Vaccinations have accelerated the reopening

What’s different about this latest Covid wave? Vaccinations. More than two-thirds of adults in the U.S. have received at least one dose of a Covid-19 vaccine, and those who have been fully vaccinated are largely protected from the worst effects of the virus. Covid-19 now poses so much greater a risk to those who haven’t yet received a shot that the Biden administration has described the current situation as a “pandemic of the unvaccinated.” 

In earlier waves of the pandemic, local governments resorted to curfews and total shutdowns of businesses in order to curb the spread of the virus. Now, much more lenient policies are being implemented instead. 

New York City will soon mandate that restaurants, bars, gyms, and other businesses require patrons to show proof of vaccination before coming inside. Meanwhile, some of the country’s largest employers and biggest brand names — Walmart, Disney, United Airlines — are beginning to require their workers to show proof of vaccination before they return to work in-person. 

Even with these more relaxed changes, the surge in cases driven by the delta variant may cause people to reassess what they’re comfortable doing day-to-day. In our CNBC | Momentive poll, 25% of those in the general public say they’re changing their outlook for the rest of 2021 “a lot,” 41% say it has changed only “a little,” and 32% haven’t changed their outlook “at all.” 

Even with increased mask adoption and vaccine passports, the public’s concerns about the delta variant could still shift as the perceived risk ebbs and flows. Small businesses will have to continue to adapt. 

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