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The Delta variant has Americans swapping the shopping bag for a seat at the bar this fall

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On a Thursday night in mid-August, Sahith Obbu engaged in a time-honored college student tradition: He met up with friends for drinks at a bar down the street.

The 21-year-old UCLA student sat outside the Barney's Beanery near campus with five of his closest friends, all of whom are vaccinated. After more than a year of isolation, Obbu says it's nice to spend time with a small group of people he knows are safe.

"Getting food and hanging out has just been a very convenient and easy way to catch up with people I haven't seen in a long time," he told Insider. "The thing I'm trying to spend the most on isn't really on stuff but on trying to see people that I haven't seen in a while and reconnecting."

Other than a few concert tickets he may have to return, Obbu says he's spending his money on the food and alcohol he buys with loved ones.

Most Americans are doing the same as COVID cases tick up due to the Delta variant. Companies are delaying return-to-office plans, schools that initially opened in-person are already resuming virtual learning, and the TSA will extend the federal mask mandate on flights past its expected September expiration.

Americans' faith in the economy is at its lowest point since April 2020. After months of stocking up on purchases driven by a year of lockdown — like going-out clothes as the world reopened or furniture for our at-home sanctuaries —  spending slowed in June and July. But, when it comes to going out to eat at restaurants or drinking at bars, Americans are swiping their cards like crazy.

Americans prefer a drink in their hand over a shopping bag, for now

As shown in the chart below, spending on bigger-ticket items like furniture, home improvement, and cars is still slightly above spending on bars and restaurants in total dollars, but those categories have been declining since spring, while Americans have just been going out to eat and drink more and more. While spending on cars fell 3.9% through July and clothing and accessories stores slid 2.6%, spending at restaurants and bars rose 1.7%.


Initiatives like NYC's Open Restaurants, which lets businesses permanently take over former parking areas to expand outdoor seating, have helped make customers feel safer, as have citywide vaccine mandates for indoor dining in places like NYC and San Francisco. And although the odds of breakthrough infections have gone up with Delta, the vaccinated remain well protected from serious disease leading to hospitalization and death, adding another sense of safety.

Obbu describes the feeling of getting back out into the world again after quarantine as being similar to indulging in a vice after a period of deprivation. "It's like if I eat something sweet, I'm like, 'Ah crap, I really like this stuff.'"

Workers in bars and restaurants might feel differently. Managers are hiring like crazy, but can hardly keep up with demand, as workers are slow to return to work due to relatively low pay and fears of the virus. This is forcing establishments to close early and charge more this summer, unable to accommodate the masses of hopeful diners.

"The worst of COVID for the restaurant business is right now," Christopher Bates, founder of FLX Hospitality, which operates five restaurants in the Finger Lakes region of New York, told Insider in July. 

Goldman Sachs chief US economist, David Mericle, wrote in a recent note that spending on dining, travel, and some other services is likely to decline in August, although he anticipates the drop to be "modest and brief."

But Richard Curtin, chief economist for the University of Michigan's Surveys of Consumers, said last week that Delta may not harm the economy as much as people think. The economy has become so adaptable that it's better prepared for the latest wave of infections than it was a year ago, and we likely won't go into full lockdown again

That means the service industry will stay open, as the summer of spending turns into the fall of eating and drinking. It's likely that after a few glorious months of freedom, most Americans are going to stay at the bar with their friends.

"I was more comfortable in the months of April, May, and June," Obbu said. "After that, it's been less and less comfortable just because information is steadily coming out and the situation always changes. But it's hard, like it doesn't seem that bad, it's kind of like looking at it through rose-colored glasses."

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