Will the Omicron Variant Dampen Economic Recovery?
Businesses and consumers are watching closely as the highly contagious Omicron variant raises new questions about economic recovery. Will the new variant force shutdowns like seen in the early days of the pandemic? Will Omicron feed the inflation fire or cool things off instead?
"These mutations keep coming," Robin Brooks, chief economist at the Institute of International Finance told the Associated Press. "What is the probability that sometime we get a really nasty one? No one has any idea. This thing is mutating, and it's very, very hard to say.''
Right now, businesses are stuck in a waiting game until it becomes clearer how Omicron will pan out. "Unable to assess its longer-term consequences, businesses, consumers and policymakers have struggled to respond to the omicron threat," the article reads.
On one hand, the new variant could increase already booming demand, making both inflation and supply-chain backlogs worse. On the other, Omicron could slow economic growth long enough to take the pressure off inflation, the AP reports.
"Omicron has been so rampant," Kathy Bostjancic, Oxford's chief U.S. financial economist told the AP. "And it is hitting in high-density areas of the Northeast. We think it is going to take a pretty big toll on economic activity.''
"History is repeating itself with the COVID virus suddenly reappearing and dampening economic growth prospects," Sung Won Sohn, an economics and business professor Loyola Marymount University in Los Angeles, said in another AP article.