Why economists say 2021 ended on a high note despite Omicron
At least that’s what economists are hoping.
Omicron caused infections to skyrocket, businesses to struggle and workers to stay home sick in late December. But before the variant arrived on US shores, the recovery was chugging along.
That means the fourth quarter may prove to be the one that squeaked through, slotting between Delta and Omicron — and looking pretty good.
Economists predict US gross domestic product, the broadest measure of economic activity, grew at an annual rate of 5.5% between October and November, according to consensus estimates from Refinitiv.
By contrast, the first three months of 2022 could reflect some of the worst economic growth since the 2020 lockdowns.
“In terms of growth momentum, January is on track to be the worst month since December 2021,” said Jefferies chief economist Aneta Markowska. “We have penciled in a 1.5% growth rate for Q1 GDP,” she said.
Rising inflation and early holiday shopping
Just because the economy may have gotten lucky in the final quarter of the year doesn’t mean it was devoid of problems.
US consumers, the backbone of the economy, had plenty to grapple with.
Higher prices — along with shipping delays and Omicron’s arrival — weighed on how Americans were feeling by year-end. And this sentiment continued into the new year.
On Tuesday, consumer confidence data revealed that Americans feel okay about the economy right now, with plenty of jobs available and low interest rates, in spite of Omicron. But the near-term outlook is much more uncertain between rising interest rates and the fear of additional potential Covid variants disrupting the recovery.
