Welcome to December!
It’s a little hard to believe that 2021 is almost in the books. Hopefully, you find a quiet moment to reflect on the past year and to think about all of the gifts you may have received – tangible or intangible.
One ‘gift’ none of us were looking forward to is another variant of COVID. The World Health Organization designated the newest strain a ‘variant of concern’ and gave it the Greek letter Omicron. Existing vaccine efficacy against Omicron’s mutations is unknown, though the drug companies are striking a confident tone. Still, markets reacted negatively to news and sold off sharply in a shortened trading session on Friday, November 26th.
How worried should we be about Omicron’s economic impact? Supply chains have been playing catch-up all year, so the new variant could increase delays if countries choose to tighten restrictions. Consumer spending has been robust heading into the holiday season, so even if tighter restrictions return to bars, restaurants, and stores, we may see a dip rather than a full disruption in spending patterns.
In short, there’s a distinct possibility that Omicron’s impact is limited to a few bad trading days at the end of the year. At worst, Omicron’s impact may end up being like easing off the economic accelerator rather than slamming on the brakes – though the situation remains fluid and new information could alter the outlook.