L.I ate November It almost started to feel like the first days of the epidemic. The Omicron variant would be known as the filter-out and investors feared either another round of restrictions, or people would shut themselves off as news of the global stock market crash. After two months, the effects of Omicron are slowly coming into focus. So far this is, basically, better than scary. Markets are volatile, but due to the possibility of higher interest rates instead of Covid-19. Goldman Sachs, a bank, has developed a share-price index for European companies, such as airlines and hotels, which improve when people are able and willing to stay in public space. The index, a proxy for concern about the virus, has risen in recent weeks compared to the broader stock market.
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Cautious optimism backs up high-frequency economic data. Of Nicholas Oloszko OECDThink-tank of a rich country, produces a weekly GDP The 46 middle- and upper-income economies use data from Google-search activity on everything from indicators, housing and jobs to economic uncertainty. Adjusting its index, which makes a good prediction of official numbers, we assume GDP The pre-epidemic trend in these countries is about 2.5% below (see Chart 1). That’s a little worse than November, when GDP The trend was down 1.6%, but better than a year ago, when output was down about 5%.
A few reasons explain why the worst fears about the economic impact of the variant have not yet been met. The greater uncertainty with Omicron relates to whether the greater (greater contagion) exceeds the better (lower virulence) and thus whether there is a detrimental increase in hospitalization and mortality from Covid-19. So far, however, few governments other than China, which is still married to its zero-cue strategy, believe that additional strict restrictions on the movement of people are needed.
A quantitative measure produced by UBS, A bank, ranks global constraints from zero to ten and finds that the average global score has increased from 3 to 3.5 in recent weeks. Only one rich country, the Netherlands, went into a proper lockdown (although it was relaxed on 26 January). UBS It was also found that the share of international travel routes, including covid-related entry restrictions, has declined by 31% worldwide since October.
More people seem to be happy to take risks. Goldman Sachs has created an “effective” lockdown index that takes into account not only government directives but also people’s preferences. So far its global index has been tight at almost the same level as last summer’s delta wave, though four to five times more than the daily transmission. Even in places where the rapid spread of the Covid-19 is a novelty, people are basically continuing as usual. In San Francisco most autumn cases were in low double digits. Although the city now has an average of about 2,000, the gym and restaurants are busy every day. Our global “normalization index”, which shows how human behavior has changed compared to the pre-covid rule, has declined in recent weeks, but now seems to be recovering.
Today’s case numbers suggest that about 5-10% of Americans currently have Covid-19. Such a high spread has created a new difficulty that did not exist with the previous forms: the widespread absence of staff. According to a survey conducted earlier this year by the Census Bureau, 8.8 million Americans were either out of work because of caring for someone infected with Covid-19 or because of the disease themselves. By the end of 2021, 138 National Basketball Association players were unable to work due to covid-related reasons, although this number has decreased. A small but growing number of stores in San Francisco, already struggling with labor shortages, are closing quickly due to a lack of staff.
The effect of such an absence on the output is difficult to measure, but it seems to be limited and short-lived. For a start, various factors can offset their effects. Some isolated workers will be able to work from home. If a restaurant is closed, potential diners may still have other places to visit. And for at least a while, coworkers who are not infected may take some relaxation. The overall pull can be so modest. A study published earlier this month by another bank, JPMorgan Chase, speculated that the absence could ease the situation in Britain. GDP 0.4% in January.
Moreover, as the number of cases declines in both the UK and some US cities, the economic impact of Omicron appears to be rapidly fading. Visionary surveys also suggest that companies are not overly concerned For example, there are slight signs of declining business confidence (see Chart 2).
Despite better-than-expected overall performance, the global economic recovery from the 2020 lockdown is still uneven. The gap between the best and the worst performers is as wide as ever. As South Africa’s Omicron waves broke, GDP Has grown and is now consistent with its pre-crisis trend. Britain’s economy seems to be recovering fairly quickly.
Other places are still fighting, though, due to a slow roll-out of boosters, low population immunity or general misfortune. According to OECDBy its measure, the Spanish economy is still about 7% smaller than its pre-Covid trend. Omicron has not done much to stop the global economic recovery. However, some places still feel far from normal. 3
Deep digging
The Economist has created a “global normalization index” to determine how life has been disrupted by Kovid. It tracks daily behavior related to eight indicators divided into three categories: transport, recreation and commercial activity.
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