Omicron Threatens Workforce Recovery
Omicron's economic fallout, which is likely to increase before it eases, illustrates that the recovery remains vulnerable to the Coronavirus's unpredictable trajectory.
The Omicron variant is impeding economic recovery by exacerbating worker shortages for already understaffed enterprises and forcing consumers to cut back on spending in restaurants, hotels, and aircraft, which have been hit hard by two years of pandemic upheaval, among other things.
Due to a shortage of competent workers in the United States, major airlines canceled thousands of flights this week. At the same time, public transportation networks in New York and Washington cut operations. As a result of the interruption to professional sports schedules, companies such as American Express, Goldman Sachs, and The Washington Post have delayed their plans to return to work in January.
While the aftermath of Omicron is expected to worsen before it improves, it illustrates that the recovery is still subject to the Coronavirus's unpredictable path through the body. Workers being unwell at an alarming rate – Capital Economics estimates that more than 5 million Americans are in quarantine – is impacting firms that are already struggling to recruit qualified candidates for open positions. Even as the pandemic fatigue worsens, there is still optimism that Omicron will be a terrible but brief squall.
So yet, Omicron has had little impact on financial markets, which are focused on the Federal Reserve's expected credit tightening and the winding down of the $1.9 trillion American Rescue Plan, among other concerns. The Dow Jones industrial average has increased at an annualized rate of 15% since the South African government decided to submit a new variant to the World Health Organization in late November. According to the Bloomberg survey, the yield on the benchmark 10-year treasury security, which would be anticipated to rise if investors predicted a recession, has moved relatively little in recent weeks.
Despite being knocked down by the delta strain of the Coronavirus late last summer, the economy recovered to grow at an annual rate of more than 7% in the final three months of the year, according to Federal Reserve Bank of Atlanta calculations.
The bulk of Wall Street financial analysts and economists are now modifying their projections for the first few months of 2018. According to O'Sullivan, he has reduced his first-quarter growth forecast from 3% to 2%. Still, he believes the economy will catch up in the next three months.
The rise of the new kind in question has stemmed from an unprecedented churn in the employment market. Earlier this week, the Labor Department disclosed that a record 4.5 million Americans resigned or changed jobs in November. The employment figures for January may be skewed due to an exceptional spike in the number of employed but unable to work due to illness.
Omicron is putting to the test Jerome H. Powell's remark last summer, as chairman of the Federal Reserve Board of Governors of the United States, that Americans have "learned to live with" the Coronavirus. Companies, according to Powell, have created new ways to operate in the face of a global pandemic, and vaccines have lowered the possibility of government shutdowns.
Several institutions are dealing with specific personnel concerns. During the first waves of the epidemic, a surge of medical professionals rushed to geographical hotspots, relieving the strain on already overwhelmed local healthcare providers. As the omicron variant spreads worldwide, individual hospitals and clinics are forced to fend for themselves.