- With the omicron wave of the pandemic rapidly spreading across the U.S., the robust economic recovery is facing a new threat that policymakers have little control over people calling in sick.
- The widespread absenteeism is already constraining output, and several economists began the new year by downgrading their first-quarter forecasts.
- Walmart Inc. has closed at least 60 of its U.S. stores for deep cleanings.
The healthy economic recovery is under a new threat as the pandemic’s omicron wave spreads across the United States, and politicians have little influence over people calling in sick.
What began as a series of holiday flight cancellations as pilots and other crew members were ill or were placed in quarantine is now a reality at factories, grocery shops, and ports, putting supply systems to the test once more as reported by Time.
Companies closed
The widespread absenteeism is already constraining output, and several economists began the new year by downgrading their first-quarter forecasts.
“You just don’t know when it’s going to hit you,” said James Beall, chief executive officer of the Washington, D.C.-area Ledo Pizza chain.
On any given day last week, at least three of the company’s 110 locations were closed and as many as five were operating on reduced hours.
“Our new normal is turning into another new normal.”
Just how bad or enduring the omicron toll will be may take weeks to determine.
Even the January numbers, due Feb. 4, are unlikely to reflect the entirety of the impact, which is more likely to be measured in lost output due to sick days than lost jobs.
Impact of Omicron
Nick Bunker, the chief economist at online job-listing firm Indeed Inc., likens the impact of omicron to the blizzard of 1978, which dumped as much as four feet of snow on his native New England in less than 36 hours and yielded weeks of disruption but also a rapid recovery.
That means “this big, very, very large sharp shock to the economy and the labour market specifically.
But then the hope is that, like a storm, it ends and then there’s a return to prior trends,” Bunker said.
“Things are only likely to get worse in the near term,” he wrote in a note to clients.
Moreover, “the conventional wisdom that omicron presents no threat to the economy may prove too sanguine.”
‘Unprecedented’ Sick Days
Staff shortages have continued to disrupt airlines, with Alaska Airlines saying that an “unprecedented” number of workers calling in sick caused it to cancel 10% of its flights for the rest of January.
The real question for the industry is whether it will cause carriers to slow planned 2022 growth if it continues into February and beyond, said Conor Cunningham, an analyst with MKM Partners.
“My expectation has been that other airlines will need to slow growth,” Cunningham said.
Some hospitals are at a breaking point, dealing with more sick or exposed workers than at the worst of the pandemic.
“We’ve had more staff out because they’ve tested positive and have contracted Covid than we did at the very beginning,” said Lynda Shrock, vice president of human resources at Logansport Memorial Hospital in Logansport, Indiana.
Store Closures
On Rodeo Drive in Beverly Hills, luxury retailers Gucci, Hermes, and Louis Vuitton have all reported cases among staff, according to Los Angeles County’s public list of workplace outbreaks.
Walmart Inc. has closed at least 60 of its U.S. stores for deep cleanings.
In a call with reporters on Friday, Scott Keogh, chief executive officer of Volkswagen AG’s U.S. unit, said he was “100%” certain that the industry was about to face production disruptions due to omicron.
“There is no flexible new normal” for assembling a car.
While economists and investors expect the impact to be short-lived, its magnitude may be sizable.
Though omicron could, he said, affect how the Federal Reserve views the recovery and when it acts to raise rates.
Restaurants Struggle
The variant is another blow to industries like hospitality that were struggling to come back to pre-pandemic employment levels, said Jerry Nickelsburg, faculty director of UCLA Anderson Forecast.
“The recovery for restaurants appears to be going in reverse rather than moving forward,” Weston said.
At Ledo Pizza in the D.C. area, CEO Beall is determined to keep a company his grandfather started in 1955 alive.
That means getting smaller amounts of ingredients like mozzarella sticks and waiting longer to get them.
–With assistance from Joe Deaux, Leslie Patton, Gabrielle Coppola, Deena Shanker, Carey Goldberg, Justin Bachman, John Tozzi, David Welch, Keith Naughton and Augusta Saraiva.
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Source: Time
