Surge in omicron variant fueling economic concerns

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(NewsNation Now) — One of the big questions about the latest surge in COVID cases is the impact it will have on the U.S. economy.

The nation remembers what happened in 2020, with doors closing and businesses that had been around for a century shutting down.

Following three straight days of losses, the stock market bounced back a little bit yesterday, perhaps signifying some renewed confidence after a few rocky weeks in a row.

But fears over inflation, the global supply chain crisis and how omicron may impact both make it pretty difficult to predict what happens next.

Inflation — initially dismissed by the Fed as a fleeting problem — has lingered. Consumer prices are up nearly 7% this year, the steepest increase in nearly four decades. Gas and energy prices have soared and the cost of food isn’t far behind driven by kinks in the global supply chain.

Economists say that’s likely to lead to interest rate hikes next year as the Federal Reserve tightens its monetary policy.

Looking to next year, Michigan State University economics professor Charles Ballard said, “I believe that in 2022, inflation will moderate. But what if it doesn’t? If it doesn’t, then the Federal Reserve is likely to step on the brakes by restricting credit.”

Federal Reserve Chairman Jerome Powell addressed the issue, saying, “We are prepared to use our tools to make sure that that higher inflation doesn’t get entrenched.”

Wall Street started the week with a huge sell-off. But Tuesday the Dow enjoyed a 560-point rebound led by energy and tech companies.

President Joe Biden gave no indication of further shutdowns or restrictions in his address, providing some reassurance to the global markets.

American unemployment was at 4.2% in November, a two-point improvement from the start of the year.

But it remains to be seen how companies will respond to the surge in new COVID cases. Whether that means cutting staff or delaying a return to the office. There’s already concern over how omicron will impact industries like manufacturing, which rely on people congregating in large groups, and how the following material shortages may drive inflation even higher.

There may be a silver lining coming for the airline industry soon, as Biden is reportedly considering a lift of the travel ban on eight African nations that was instituted back in November after the first case of omicron cropped up in South Africa.

The travel ban hasn’t done much to slow the spread of that variant in the United States, as its rapid spread comes at an uncertain time for the U.S. economy.

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