New York's Rockettes have cancelled their Christmas show. London's restaurants are closing as commuters try to avoid the city. Some Broadway shows have cancelled some performances. The National Hockey League has suspended all its games until after Christmas. Boston will require all diners, shoppers, and revelers to present proof of vaccination in order to enter bars, restaurants, and shops.
An increased sense of anxiety has started to affect the ability of some people and businesses to continue as normal in the face the extremely contagious Omicron variant of the virus, which has quickly become the predominant version in the United States.
Others are still travelling, spending, and congregating as usual, but with greater caution. Holiday travel is still a strong business. Restaurants and stores are still seeing solid sales. Omicron has not yet managed to draw large numbers of people away from the cinemas. Record crowds of all ages flocked to the theaters this weekend for "Spider-Man," a movie that will be released in July.
The US population growth rate was the lowest in the first year of pandemics
Steve Buck, chief strategy officer at EntTelligence, stated that "the movie theater has not been hindered yet by omicron."
However, it is not yet clear what omicron will ultimately signify for the health and well-being of Western economies. These have been through a rollercoaster ride of ups and downs since early 2020.
Robin Brooks, chief economist of the Institute of International Finance, stated that "these mutations keep coming." What is the chance that we will get one of these really bad ones? Nobody knows. This is an ever-changing world, and it's extremely difficult to know the future.
Will omicron spread to factories and ports?
It could mean that people will be able to relax at home and spend less on services such as restaurant meals, concerts, or hotel stays. This could potentially weaken the economy, but also defuse inflationary pressures.
Are plans to return-to-work for white collar workers being put on hold indefinitely? This will increase the impact on many city's downtown businesses.
Or will the blip of omicron be a blip that barely slows down what has been a remarkable strong recovery from the intense but brief pandemic recession
Stock markets around the globe were spooked by uncertainty and fear of worst-case scenarios for three days, before recovering Tuesday.
Megan Greene (Kroll Institute's global chief economist) said that it is not clear whether this will have a positive or negative impact on growth and inflation over the medium-term. "We don't have enough data."
Businesses, consumers, and policymakers are unable to evaluate the longer-term effects of the omicron threat.
Chicago dietitian Danielle Ballantyne had planned to visit stores and find inspiration for holiday gifts. As word of omicron began to spread, she decided to stay home and shop online instead.
Ballantyne stated that "omicron is more infectious" based on what she has been hearing in the media. Therefore, I'm trying to be selective about where I go in large public spaces.
Untuckit, a clothier based in New York, reports a 15% drop of traffic to its stores in major cities such as Chicago and New York. This is similar to the results it saw last summer when the delta variant began spreading.
Aaron Sanandres (CEO of the company) stated that "it impacts people's perceptions of comfort and safety, and their willingness to venture out,"
As the spread of infections has been rapid, European countries have gone further than the United States. There are restrictions that range from full lockdowns in the Netherlands to mandatory indoor mask use in the United Kingdom.
In western England, a theater refunded $240,000 for tickets. The Advantage Travel Group, representing U.K. agents in travel, stated that mid-December saw a 40% drop in business, including cruises, packages holidays, and flights. One week ago, cancellations accounted for half of the space booked at a Madrid diner.
London's downtown restaurants are struggling as workers go home.
"As soon a they said work from home it's completely empty," stated Sally Abe, a chef at central London's Conrad Hotel.
Britain announced Tuesday that it would give 1 billion pounds ($1.3 million) in grants and other assistance to the hospitality industry to help them survive. Pubs, restaurants, and other businesses whose incomes have plummeted in the wake of public health warnings pressed the government to comply.
The economic challenges posed by the pandemic have increased since it struck nearly two years ago. The virus ravaged the economies and nearly shut them down. In the United States alone, more than 22 million people lost their jobs. Restaurants, bars, and hotels were especially affected.
Record-breaking government spending and the eventual rollout of vaccines led to a surprisingly strong recovery that gave many families the financial and confidence they needed to recommence shopping. It also sparked optimism about the holiday season in 2021: The National Retail Federation updated its forecast just before omicron became a serious threat to the United States holiday sales.
Omicron infections are a concern now as they could disrupt manufacturing and shipping, increase backlogs in the supply chain and cause inflation to continue to rise. This could increase the already high demand for goods by consumers, which could lead to more supply shortages.
Greene, the Kroll Institute economist, stated that if everyone is scared about going to a restaurant or bar, then they might continue to purchase goods. "So that could increase the short-term trend, and make inflation worse."
She said that if growth is actually slowed (by omicron), then it should reduce inflation.
Other reasons exist to believe that the recovery may slow down. The United States is seeing a decline in economic assistance from federal spending and relief checks. The Federal Reserve is decreasing its economic support. China's economy is experiencing slowing, which makes it the second-largest after the United States.
At the moment, the U.S. bond markets is expressing more concern about economic weakness and runaway inflation. The benchmark 10-year Treasury note yield remains below 1.5%, a historically low level.
Oxford Economics has reduced its estimate of U.S. growth for the October-December quarter, citing omicron, and other factors. This is a decrease from its earlier 7.8% estimate.
Kathy Bostjancic (Oxford's chief U.S. financial economics economist) said that Omicron was so widespread. It is affecting high-density regions in the Northeast. It is expected to have a significant impact on economic activity.
It's possible, however, that the economy will be resilient to the latest COVID challenge. The new variant's impact on retail traffic is not evident, at least not yet. Sensormatic Solutions reported that store traffic increased by nearly 20% over the previous year, but was down 23% from the prior pandemic year. Black Friday sales increased 30% over last year.
Peter McCall, Sensormatic’s senior manager for retail consulting, stated that while shoppers still prefer to shop in retail stores, they are more inclined to shop at open-air malls and outlet malls than enclosed shopping centers.
Arnold Donald, Carnival Corp.'s CEO, stated this week that Carnival experienced a "little spike" in cancellations, but that it would be a temporary blip.
Donald stated, "The booking patterns have been strong."
Traffic is also high at big retailers. On Sunday, hundreds of people gathered at the American Dream Mall in East Rutherford to see the Toys R Us flagship shop.
Yehuda Schmidman, cofounder of WHP Global and owner of Toys R Us, said, "We were ready for a big event, but it was even larger than we thought."
Abt Electronics Chicago claims it is enjoying a strong holiday season with sales up 10% compared to a year ago. Jon Abt, co president and grandson of the founder of Abt Electronics, stated that omicron has changed how people shop. Although there are fewer people shopping in stores, curbside pickup is becoming more popular.
He has also made changes to workers to stop the spread of COVID. He requires them to remain at the counters or warehouses they work in, rather than jumping between different workplaces.
Abt stated, "I am an optimist." "I'm not a worrier. This is the beauty of life. This is life. You have to learn to accept the inevitable.
