Economists Cut 2022 GDP Estimates, Due to Omicron

The omicron variant is causing economists to lower their growth projections for the coming year.

In an article published by The Wall Street Journal, Moody’s Analytics head analyst Mark Zandi stated he lowered his first-quarter GDP projection for the U.S. from 5.2 percent to 2.2 percent.

This is because he can see the economic harm accumulating as we move into the first quarter. Travel expenditure has been reduced, as has the postponement of performing arts events.

Omicron’s Influence

According to the firm, Pantheon Macroeconomics also reduced its forecast for annualized GDP growth in the United States from 5% to 3% in the first quarter of 2022.

Meanwhile, some experts carefully check omicron before altering their projections.

Unfortunately, omicron spread during the Christmas season, even in cities like New York City, where individuals are heavily vaccinated.

As a result, economists believe if individuals start canceling trip plans and becoming apprehensive about utilizing accommodations, this will impact economic growth and employment opportunities.

A hedge fund manager Ackman believes we have reached a point with COVID when the emphasis should be focused on severity and safeguarding individuals who are most susceptible, rather than on the number of cases.

While unvaccinated people continue to be at risk, the decision to get vaccinated remains a personal one. They must provide the resources the healthcare system requires, and they must begin to live their lives once more.

There is a strong possibility that omicron will vaccinate everyone who hasn’t previously been inoculated. Let them safeguard the most vulnerable while allowing them to continue living their lives.

According to Ackman in a follow-up tweet, the beginning of the end of living in terror of COVID is drawing nearer.

Across the Pond

Beyond the borders of the United States, omicron is driving Western politicians to tighten COVID-19 limitations.

As per forecasts released Tuesday by the Ifo Institute for Economic Research, Europe’s biggest economy will contract by 0.5 percent in the fourth quarter of this year, relative to the third, and will stall in the first three months of 2022.

When the economy suffers for two quarters, the economy is considered to be in recession.

Growth is projected to accelerate next summer as a surge of coronavirus infections recedes, and supply constraints are alleviated. Still, the industrial powerhouse will suffer, due to the weak start of the year.

Ifo lowered its growth prediction for next year to 3.7 percent by deducting 1.4 percent from its previous forecast of 3.8 percent. Ifo anticipates inflation rising by 3.1 percent this year and 3.3 percent in 2022.

According to the Institute for Fiscal Studies, consumer prices will not function normally until 2023.

During the weekend and into Monday, omicron has been largely to blame for a significant increase in the number of airline cancellations. According to the FAA, flights arriving in or departing from the United States were grounded in large numbers on Christmas Day alone.