W.The hat is The economic impact of Omicron? The latest outbreak of the coronavirus has taken place at such a rapid pace that predictors are still holding their breath, and it will take some time before its economic effects become apparent in official data, which reveals a backlog. But some faster, albeit partial, indicators can provide some insight into how consumers and workers can adjust their behavior.
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Consider people willing to go out first. A dynamics indicator that uses real-time data from Google and is built by Economist Includes workplace, retail and recreation site and transportation hub inspection. This measure has been reasonably stable in the United States, although it is below pre-epidemic levels and has declined somewhat in Britain and Germany in recent days. But these title stats differ greatly depending on the type of activity underlying. Returning to the office seems to have stopped. Workplace travel in the US and Germany has dropped by about 25% and 16%, respectively, in pre-epidemic levels for the week since December 23rd. In Britain, where the government issued guidelines for working from home, they were 30% lower (see Chart 1). In contrast, retail- and entertainment-related activity continues to recover in all three countries. This indicates that people may become more discriminating when it comes to getting out of the house, especially with the onset of the festive season. It may also indicate that those who could easily work from home were doing it, a sign of the economy’s increased adaptability to the new look.
Other measures show that the hospitality industry is taking a knock. According to data from the booking platform OpenTable, fewer people are eating at restaurants than in 2019. The US and UK had 12-15% fewer dinners per week from December 20 than in the same period in 2019 (see Chart 2).
Omicron also seems to have contributed to the disruption of travel. This has been most notable in the US and China, where domestic air travel has returned to normal. About 3,500 domestic and international flights, starting or ending in the United States, have been canceled since the week of December 26, according to Flightair, a data firm – about 2.5% of the total flights. This compares with the cancellation rate of 0.7% in the same week in 2019. American Airlines has blamed Covid-related staff shortages and bad weather for the cancellation. The number of passengers passing through American airports on December 22 and 23 is slightly higher than the same period in 2019. But on the 24th and 25th, only 3.2 million traveled, up from 5 million in 2019.
These indicators give a limited view of the economy. However, they are better able to capture the areas most likely to be affected by the new outbreak of Covid-19. Analysts at Moody’s, a rating agency, have revised their forecast for growth in the U.S. in early 2022, partly due to lower travel costs. Economists at Pantheon Macroeconomics, a consultant, expect that Britain’s pain will be concentrated in the hospitality, entertainment and travel industries, while other sectors remain unaffected. This indicates a smaller overall economic impact this time around than the previous wave. While the infection is still growing and governments are considering new restrictions on activity, the full impact of Omicron may not yet come. As Covid-19 enters its third year, every forecaster now knows how to prepare for the unexpected. 3
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This article is published in the Finance and Economics section of the print edition under the title “Omicron omens”