Fragile U.S. Economic Recovery Hit By Omicron Variant
Experts have warned of a “viral blizzard” in the United States, as the new Omicron form is fast spreading across the country and has been found in at least 41 states.
According to the Centers for Disease Control and Prevention, Covid-19 infections, deaths, and hospitalizations have all increased in recent weeks across the country, with many areas experiencing high levels of community transmission (CDC).
According to the latest CDC data, the seven-day daily average of Covid-19 cases is over 122,000, up 1.5% from the preceding week.
According to the CDC, the seven-day average of daily deaths is around 1,180, up 8.2% from the previous week.
According to the data, the US is currently seeing around 7,800 new hospital admissions every day, up 4.4% from the previous week.
The novel coronavirus variant has put a gloom over the holiday season in the U.S. with a sharp increase in cases leading to restaurant closures, large-event cancellations, and Americans postponing travel plans.
The Omicron version of the coronavirus has already been found in 38 states, and it follows on the heels of a surge of Delta variant cases that pushed up case counts and pressured health systems across the country.
The most recent wave shut down college campuses and forced the cancellation of high-profile events like as Broadway performances and Saturday’s UCLA men’s basketball game. Meanwhile, fears of disease are causing travellers to postpone post-holiday activities, and many well-laid return-to-work plans by large and small businesses are being derailed.
Stock markets also finished the week with a loss, with the Dow plunging more than 500 points on Friday, with some of the dip ascribed to Wall Street concerns over Omicron.
The decline, which comes after a strong summer and fall, is expected to stifle the economy’s recovery, according to some economists. The question is, how much will it increase?
“This new variation will almost certainly cause a slowdown in consumer spending in the coming weeks and months, as well as in 2022. At this point, it’s unclear how bad that will be “According to CBS MoneyWatch, Gregory Daco, chief U.S. economist at Oxford Economics.
“I think there are increasing concerns about the new strain, and I think that will be reflected in somewhat of a winter chill in economic activity,” Daco said. “The more this variant spreads, the more rapidly it spreads, the more people will hesitate to go out to movies, major events.”
He pointed out that the magnitude of the economic impact will largely be determined by the degree of disease caused by the new strain, which is still unknown. Economic activity will likely pick up again in the spring of next year, he projected, if Omicron instances turn out to be milder than other strains and large numbers of afflicted people do not overload healthcare facilities.
However, there is a troubling example from across the pond: Omicron is already ubiquitous in the United Kingdom.
“The current experience of the U.K. suggests that the U.S. services sector is about to take a severe hammering,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, wrote Thursday in a note to investors. “The ensuing re-emergence of Covid fear will drive down spending in hotels, restaurants, bars, and other leisure venues, and we expect air travel to be hit too.”
Overall, Shepherdson expects the viral wave will lower first-quarter GDP growth in the United States to 3% from 5%, he wrote.
When Brendan Sweeney, CEO and founder of restaurant technology startup Popmenu, expanded to the United Kingdom a few months ago, he witnessed firsthand the impact on businesses. “In London, getting a reservation was nearly difficult. ‘Our Christmas is absolutely booked up,’ said one restaurant owner to me “According to CBS MoneyWatch, Sweeney.
“It was September, and they had completed their reservations. They’re now closed.”
Hundreds of eateries in New York were said to have shuttered on Thursday and Friday, some after employees or guests reported positive Covid-19 testing, and others out of an extra precaution to allow their employees to be tested prior to reopening to the community.
While Laurence Edelman’s Left Bank restaurant in Manhattan’s West Village is still operating, additional restrictions have been reintroduced, some of which are evocative of 2020. For starters, all employees must wear masks at all times, and patrons must keep their faces hidden unless they are eating or drinking.
“As of yesterday, we immediately went back to full masking for all employees and all customers if you’re not eating. It’s kind of been – it all shot out in like a 12-hour span. It went from zero to hundred,” Edelman told CBS MoneyWatch.
After a number of guests with indoor bookings requested to be seated al fresco on recent December days, Left Bank is expanding its outside dining, to-go, and delivery operations.
“As the dining-in reservations can dwindle, we expect that out take-out and delivery will grow. I’m not thrilled about this but it’s something good that we’ve got and I’m happy we have it. We are equipped to deal with it. I expected this to come back around and expected to see seasonality at least in the short term.”
None of his employees have tested positive, as far as he knows. But, given the rise in case counts in other local institutions, he’s putting the safety precautions in place ahead of time.
La Compagnie des Vins Surnaturels in Manhattan’s Soho neighbourhood and Oxalis in Brooklyn’s Crown Heights neighbourhood are among the prominent eateries that have closed till further notice.
“Along with many of our friends in the industry, Oxalis will be closed tonight due to a potential Covid exposure within our team. We will reopen once our full team is tested and when we’re able to confirm that our team is healthy and well. As new Covid cases continue to rise, please be safe and let’s continue to work to keep each other safe. We will keep you all updated,” Oxalis said in an Instagram post.
The blow to restaurants and other hospitality businesses comes as many are gearing up for a record-breaking Christmas season in 2021.
“This is the toughest time to deal with another wave of mandates,” said Popmenu’s Sweeney. “There’s so many holiday parties booked, so many gatherings. It is a time that people go out.”
Restaurant traffic began to decline in early December, according to OpenTable data, when global health authorities first expressed worry about the Omicron variety. Diner traffic was roughly at the same level in mid-November as it had been before the epidemic in 2019, but by mid-December, it had dropped 16 per cent nationwide.
Other industries that rely on face-to-face interactions are also hurting. The number of hours worked in retail, as well as the number of employees, is down roughly 12% from pre-pandemic levels, and the number of stores open is down by a fourth. According to Homebase, a software provider for small and mid-sized businesses, this is the case.
The leisure and entertainment industry, which encompasses recreational activities as well as major events, is faring considerably worse. Even with fewer places operating, the sector experienced a rise in activity over the summer as Americans felt comfortable enough to stroll outdoors and even see a show – the level of work in the sector was up 30% from pre-pandemic levels. However, those figures began to decline in September and were about 20% lower by mid-December.
“The whole leisure and hospitality sector will be the first one hit,” Daco predicted. “Brick and mortar stores on the retail front, also. Any kind of in-person sector will be affected and then there will be fallout effects.”