Omicron’s Impact on the U.S. Economy So Far: Omicron has proved to be the most transmissible variant of COVID-19 yet, and despite experts agreeing that it is significantly less deadly than Alpha and Delta, it appears to have had a substantial impact on the American economy in January.
According to the Centers for Disease Control (CDC), the Omicron variant accounted for roughly 95.4% of new COVID-19 cases in the United States by the end of December. In early January, forecasts from the COVID-19 Scenario Modeling Hub predicted a “sharp and fast” increase in cases that would peak before the end of the month.
The Damage Done
HIS Markit revealed that a “flash” index of service-focused companies dropped to an 18-month low in January, falling from 57.6 in December of last year to 50.9 in January. Another gauge of manufacturing companies in America fell from 57.7 to 55 in the same time period, a 15-month low.
A reading under 50 means that businesses are not growing. Readings above 55% are considered healthy.
IHS cited labor shortages and the spread of Omicron as a major reason for the lack of sudden downturn.
On January 25, the International Monetary Fund (IMF) also released its World Economic Outlook after first delaying the report to factor in the effect of Omicron. The international financial institution downgraded its 2022 global growth forecast to 4.4% – a 0.5 percentage point decrease on its original expectation for global gross domestic product growth.
Less Dangerous, More Infectious
Child hospitalizations remain low, with an average of 4.3 children under 5 per 100,000 being admitted to the hospital with a COVID infection in the week ending January 1. It constituted an increase of 48% over the week ending December 4, correlating with the first major spike of Omicron infections.
Nonetheless, warnings from federal and state government leaders to avoid gathering with large groups over the holidays and a general fear of the spike in infections took its toll on the service industry. Employee absence caused by general sickness also hurt both service and manufacturing industries.
Another Variant On the Way?
According to the World Health Organization, the next COVID-19 variant to arise could be more contagious than Omicron, but it remains clear whether it will be more or less deadly.
Maria Van Kerkhove, the WHO’s COVID-19 technical lead, said this week that there is no guarantee the next variant will be less deadly than Omicron. She did, however, argue that it will likely be more transmissible “because it will have to overtake what is currently circulating.”
More infectious variants put more people in hospital and force more workers to stay at home, and if the Omicron variant continues to spread the economic damage will likely be seen for several more months at least.
Jack Buckby is a British author, counter-extremism researcher, and journalist based in New York. Reporting on the U.K., Europe, and the U.S., he works to analyze and understand left-wing and right-wing radicalization, and report on Western governments’ approaches to the pressing issues of today. His books and research papers explore these themes and propose pragmatic solutions to our increasingly polarized society.