Americans Will Be Coerce to Deal With Uncertainty as Omicron Will Spread Swiftly With Little or No Financial Aid

By NATE GARTRELL On Dec 20, 2021

There are already 38 states experiencing the outbreak of the Omicron variant of coronavirus. It comes on the heels of the Delta variant that pushed up the number of cases and put tension on health systems across the country.

Recent tornadoes ended classes at college campuses and caused college basketball games to be canceled, along with Broadway shows and the UCLA men’s basketball game set for Saturday.

Travelers are delaying post-holiday plans because of sickness fears, while companies large and small are unable to carry out well-laid plans to return to work. A slump in stock markets ended the week, as the Dow dropped more than 500 points on Friday, with a little of the decline attributed to Wall Street concerns about Omicron.

An economic pullback will likely dampen the recovery after a strong summer and fall, some economists asserted. However, how much will it dampen?

“It’s inevitable that this new variant will lead to a slowdown in consumer spending activity over the next few weeks and in 2022. How severe that will be is a big question mark at this point,” Oxford Economics’ chief economist Gregory Daco told CBS MoneyWatch.

“I think there are increasing concerns about the new strain, and I think that will be reflected in somewhat of a winter chill in economic activity,” Daco noted.

“The more this variant spreads, the more rapidly it spreads, the more people will hesitate to go out to movies, major events.”

In his view, the severity of the economic hit will likely be determined by how sick the new strain makes people. Economic activity is likely to pick up again in the spring of next year, he predicted, if Omicron cases are relatively mild compared to other variants and if a large number of infected people do not overwhelm the health care system.

Omicron is already widespread in the United Kingdom, a worrying example from across the pond.

“The current experience of the U.K. suggests that the U.S. services sector is about to take a severe hammering,” Pantheon Macroeconomics chief economist Ian Shepherdson wrote.

“The ensuing re-emergence of Covid fear will drive down spending in hotels, restaurants, bars, and other leisure venues, and we expect air travel to be hit too.”

Shepherdson predicts that the virus wave will reduce first-quarter GDP growth from 5% to 3%.

Founder and CEO of Popmenu, Brendan Sweeney learned about the impact of big data on restaurants when he expanded the company he owned to the U.K. in recent months.

“It was impossible to get a reservation anywhere in London. I was talking to restaurant owners who said, ‘Our Christmas is completely booked up,'” Sweeney said to CBS MoneyWatch.

“It was September and their bookings were done. Now they’re closed.”

Hundreds of Restaurants Shutting Down

Hundreds of restaurants closed in New York on Thursday and Friday, some because of positive COVID-19 tests reported by staff or patrons, and others out of a wealth of caution so that their staff could get tested before reopening.

In Manhattan’s West Village, Laurence Edelman’s Left Bank restaurant manage to remain open, but newly implemented restrictions have taken effect regardless. One requirement is that staff members wear masks at all times, and patrons are to cover their faces if they are not seated and eating or drinking.

“As of yesterday, we immediately went back to full masking for all employees and all customers if you’re not eating. It’s kind of been – it all shot out in like a 12-hour span. It went from zero to hundred,” Edelman said to CBS MoneyWatch.

A number of Left Bank patrons with reservations indoors asked to be seated outside in the recent December days. The company is also ramping up its outdoor dining, to-go, and delivery operations.

“As the dining-in reservations can dwindle, we expect that out take-out and delivery will grow. I’m not thrilled about this but it’s something good that we’ve got and I’m happy we have it. We are equipped to deal with it. I expected this to come back around and expected to see seasonality at least in the short term.”

According to him, none of his employees have tested positive. In spite of case counts rising in other city establishments, he is taking measures to prevent incidents from happening.

In addition, popular New York establishments Oxalis in Brooklyn’s Crown Heights neighborhood and La Compagnie des Vins Surnaturels in Manhattan’s Soho neighborhood have closed as well.

“Along with many of our friends in the industry, Oxalis will be closing tonight due to a potential Covid exposure within our team. We will reopen once our full team is tested and when we’re able to confirm that our team is healthy and well. As new Covid cases continue to rise, please be safe and let’s continue to work to keep each other safe. We will keep you all updated,” Oxalis wrote on Instagram.

While the Biden administration confirmed that tests would be available from December, and offered to assist manufacturers with ramping up production, restaurants testing their entire staffs must be patient: Over-the-counter tests are sold out at many pharmacies.

At clinics that perform highly accurate PCR tests, waiting times are now long and results are often delayed by more than five days.

This drastic hit and slowdown come at a time when many restaurants and other hospitality businesses were gearing up for a booming holiday season in 2021.

Holidays are all Blues

“This is the toughest time to deal with another wave of mandates,” Popmenu’s Sweeney said.

“There’s so many holiday parties booked, so many gatherings. It is a time that people go out.”

When global health authorities raised concerns about the Omicron strain in early December, OpenTable’s data shows that restaurant traffic began to decline. The diner traffic was nearly at its pre-pandemic level in mid-November; by mid-December, it was down 16%.

In-person interactions are also under pressure in other sectors. There is a drop of about 12% in hours worked and 12% in employees in retail as well as a quarter drop in terms of new establishments. These data come from Homebase, which provides software for small and midsized businesses.

Leisure and entertainment, which includes sporting events as well as recreational activities, is even worse. As Americans felt safer to venture outdoors, the sector experienced a surge in activity – even with fewer establishments open, jobs were up 30% from the pre-epidemic period. However, these numbers began to decline in September and were down by nearly 20% by mid-December.

“The whole leisure and hospitality sector will be the first one hit,” Daco predicted. “Brick and mortar stores on the retail front, also. Any kind of in-person sector will be affected and then there will be fallout effects.”

“We’re already seeing it in a number of actions on the line, we’re seeing people being more cautious when it comes to travel, we’re hearing about businesses that have implemented a return-to-work policy reversing course, we’re hearing about schools closing — those are all pretty strong signals affecting economic activity.”

Airlines are bracing for a tough new year despite Americans sticking to their holiday travel plans, which traditionally coincides with a slow period for leisure travel, analysts said

“There is not too much leisure travel because people are done traveling for Christmas and they spent a lot of money and, frankly, unless you want to go skiing, the weather is not always conducive to a getaway,” said Atmosphere Research Group travel analyst Henry Harteveldt.

Air carriers should not count on business travel taking place this year in January and February under normal circumstances. Prices have already been slashed and aggressive discounts have been offered by many air carriers already.

“They are expressing a level of reasonable caution about the impact that Covid may have and many of them have been frank in their comments in saying we just don’t know what’s going to happen because we don’t know how Omicron is going to play out,” Harteveldt remarked.

“For people who do feel comfortable, there are some good airfare deals out there.”

In contrast to last year, the majority of Americans have been immunized against the Coronavirus, resulting in the reduction of severe illnesses and hospitalizations. Yet, in stark contrast to 2020, the people will be forced to deal with an uncertain new mutation without the backup of government financial aid.

“Last year we had a COVID relief package at the end of the year, a couple of months later we had the American Rescue Plan. Is that going to happen again?” Daco inquired.

“Are people going to be spending much more, or will they be more cautious in spending in an environment in which there is greater uncertainty?”