Line chart of Citi's economic surprise index showing economic indicators are falling short of Wall Street forecasts

US and international data releases are missing forecasts at an accelerating pace, highlighting rising investor angst that the spread of the Delta coronavirus variant will slow the pace of the global economic recovery.

Several closely watched US economic measures published in recent weeks have come in well below Wall Street expectations, indicating the powerful economic growth from the depths of the Covid crisis may be losing steam.

US data have underwhelmed economists’ predictions for much of the past month, while in recent days, these reports have started missing the mark by the greatest degree since the pandemic was punishing the country last year, according to an economic surprise index collated by Citigroup.

US consumer confidence fell sharply below estimates two weeks ago, followed by weaker than expected reports on retail sales and the pace of new home construction days later. Business activity as measured by regional Federal Reserve branches has also been poorer than projected.

A similar story is at play outside of the US, with Citi’s measurements of how economic reports in G10 countries have fared compared with estimates also falling into negative territory. And the bank’s monitor of China is even bleaker, given retail sales and industrial production figures undershot estimates last week.

The deceleration in these economic gauges comes at a time when the Fed has signalled it could begin easing, or “tapering”, its crisis-era bond-buying programme later this year.

“The tone of investor focus has shifted from reopening momentum, strong fiscal and monetary support, and earnings strength to tapering talk, political uncertainty . . . China slowdown and geopolitical tensions,” said Mark Hackett, analyst at Nationwide Investment Management.

Investor sentiment has been dented by the recent figures and continued reports of supply chain bottlenecks, which have accompanied a resurgence of coronavirus cases in the US and other parts of the world.

Economists have dialled back their US growth forecasts slightly, projecting an expansion of 6.2 per cent this year. That is down from a 6.6 per cent rise forecast at the end of July, according to Bloomberg.

“The Delta variant may be the cause of the recent declines alongside supply chain disruptions, but it is bothersome and could translate into earnings issues down the line,” Tobias Levkovich, a strategist at Citi, said.

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