Friday, August 12, 2022

    Flight Cancellation, Cruise Closure Limit: Omicron is ruining US holiday economic return

    Holiday events have been canceled one after another, thousands of flights have been canceled, cruises are no longer limited: the Omicron variant has wreaked havoc in the United States and there could be more labor shortages and rising prices in the new year.

    “We are seeing some early signs that Omicron is having an impact on the economy, mainly in areas where face-to-face interaction is most important,” Oren Klachkin of Oxford Economics told AFP. In an interview

    The world’s largest economy was ready to put Kovid in the rearview mirror, but on New Year’s Eve, the virus is playing spoiler again.

    The highly contagious Omicron variant, which appeared a month ago, has seen a record number of new cases during the holiday season.

    After 5,013 cases were reported in U.S. territorial waters between December 15 and 29, compared to just 162 in the previous two weeks, health authorities warned Americans to avoid cruise travel, even to get a full vaccination.

    The cruise industry has called the decision by the US Center for Disease Control and Prevention “disappointing.”

    The warning “is particularly misleading considering that the cases identified on cruise ships consistently make up a very thin minority of the total population aboard – much less than on land – and most of these cases are asymptomatic or mild in nature,” the Cruise Lines International Association said in a statement.

    Economists say the economic consequences of this new form are difficult to measure.

    Moody’s analysts have downgraded their growth forecast for the first quarter due to Omicron, which is down nearly two percent from the previously expected five percent.

    ‘Magnified by Omicron’

    Grant Thornton economist Diane Swank warned in a tweet that the cancellation of events and the collapse of restaurant reservations were due to fears of infection as employers were facing worse manpower problems due to the increase in infections.

    “It’s not new, just enlarged by Omicron,” he said.

    The growing number of cases means that more workers are quarantined due to a positive Covid-19 test or contact with an infected person, and that staff shortages could cripple a large part of the economy.

    “We’ve already seen that what I’ve started – and obviously the CDC fears – will be an increase in those who are sick and unable to keep up with even vital services,” Swank said.

    The most visible effect was the cancellation of thousands of flights over the Christmas holidays as airlines struggled to get enough flight crew on board.

    In an effort to reduce the pressure on long quarantine requirements, President Joe Biden’s administration on Monday reduced the proposed isolation period to half to five days without any symptoms.

    Even before the latest strains appeared, businesses across the country were struggling to fill open positions, amid a wave of retirement and reluctance to return to private work amid the epidemic.

    The effect of ‘moderate’ inflation

    Unemployment fell to 4.2 percent in November, but labor force participation is well below pre-epidemic levels. The government will release the December 7 closely monitored December job report.

    Oxford Economics expects recruitment to continue and the economy to add 400,000 jobs per month by 2022, but “this does not mean that there will be no deficit in some sectors,” warns economist Nancy Vanden Houten.

    Some economists also fear that inflation, which has risen to the highest rate in nearly four decades, will worsen if the alternative further disrupts global production and transportation.

    “Inflation in the prices of many services and energy products may decrease, at least temporarily, but there is a real risk that variants are now more inflationary than inflation,” Swank said.

    But Moody’s chief economist Mark Jandy said he expects the effect of the new variant pricing to be “mild”, as opposed to the delta strain “which has driven inflation significantly.”

    Supply disruptions have eased and “although more workers than Delta will fall ill with Omicron, they should return to work more quickly.”

    Read all the latest news, breaking news and coronavirus news here.


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