The White House is confident that a spike in winter coronavirus cases caused by the omicron variant in the United States won’t wipe out the economic and labor market gains ushered in during President Joe Biden’s first year in office.
The U.S. economy added a record number of jobs in 2021, and the four-week average for new unemployment claims, adjusted for volatility, fell in late December to the lowest recorded point since the late 1960s. Meanwhile, the S&P 500 will end the year up 29% after recording 70 new all-time highs in 2021.
However, there are currently more than 2.5 million fewer workers than in 2019, and experts worry major coronavirus spikes in key labor markets nationwide could slow and, in some cases, even erase 2021’s economic progress.
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Nancy Vanden Houten, a U.S. economist with Oxford Economics, notes the latest workforce numbers do not reflect those massive COVID-19 upticks.
“So far, we haven’t seen a noticeable impact from omicron on labor market data, at least in terms of the claims data,” she said. “I think businesses are striving to remain open, particularly given the evidence that omicron produces milder symptoms.”
Omicron had a slight but noticeable impact on businesses throughout December, especially in the hospitality and travel industries. Major metropolitan areas such as Washington, D.C., and New York City have placed new mitigation protocols on indoor dining and other businesses. Meanwhile, airlines have been forced to cancel thousands of flights over the holidays as COVID attacked their workforces.
Still, the administration is acutely aware of the negative impact another COVID spike could have on the economy if not handled properly. One senior White House aide suggested to the Washington Examiner that the administration would not repeat mistakes in dealing with the 2020 winter COVID-19 wave.
“We’re not going to lock down,” that person said flatly. “That’s the big message that [Biden] continues to convey.”
Dr. Anthony Fauci, Biden’s chief medical adviser, indicated during Wednesday’s White House COVID-19 press briefing that the omicron variant would likely result in significantly fewer severe cases than 2020’s alpha wave, which White House officials suggested to the Washington Examiner would allow for containing any economic impact caused by a new wave.
“In the United States, we are getting [an] accumulation of data. The spike in cases is out of proportion to the increase in hospitalization,” he said. “We must remember that hospitalizations and deaths are lagging indicators. However, the pattern and disparity between cases and hospitalization strongly suggest that there will be a lower hospitalization-to-case ratio when the situation becomes more clear.”
“Early indications that we’ve seen from other countries like South Africa and United Kingdom of milder disease from Omicron, especially among the vaccinated and the boosted,” said Centers for Disease Control and Prevention Director Rochelle Walensky during the same briefing.
The U.S. is ending the year with a string of recorded highs for new daily COVID-19 cases. The New York Times reported 488,000 new cases on Wednesday, a short-lived record shattered by Thursday’s mark of 580,000.
While the U.S. is choosing to allocate resources toward easing the burdens placed on hospital capacity, some U.S. allies also experiencing historically high positivity rates such as the United Kingdom and France are weighing new lockdowns and mitigation protocols to slow the omicron spread.
Meanwhile, a number of forecasters have already begun revising their economic projections for 2022.
Moody’s chief economist Mark Zandi lowered his first-quarter U.S. gross domestic product prediction by 3 percentage points, citing “economic damage mounting going into the first quarter.”
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“Broadly speaking, each new wave is going to do a little less damage than previous waves,” he added before clarifying that “it feels like a very similar dynamic as when delta hit.”
