US

Omicron’s absenteeism poses a new test of US economic strength

Bloomberg –With the omicron wave of the pandemic rapidly spreading across the United States, the robust economic recovery is facing a new threat over which policymakers have little control: callers Sick.

What started as a flurry of holiday cancellations due to pilots and other staff falling ill or forced into quarantine is becoming a reality in factories, grocery stores and ports, and once again. more supply chain testing.

Widespread absences have limited output, and some economists have kicked off the new year by lowering their first-quarter forecasts. Even if the impact is temporary, as most predict, disruptions and closures are likely to slow a fragile recovery in some sectors and weigh on businesses’ future plans.
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“You just don’t know when it’s going to hit you,” said James Beall, chief executive officer of the Ledo Pizza chain, in the Washington, DC area. On any given day in the last week, at least three of the company’s 110 locations were closed, and as many as five were operating during reduced hours. “Our new normal is turning into another new normal.”

How bad or tolerated the omicron count will be can take weeks to determine. The December jobs report, released on Friday, shows the unemployment rate at low new pandemic was 3.9%, based on data collected primarily before the variant spread. Even January’s numbers, due to February 4, are unlikely to reflect the full impact, which is more likely to be measured in output lost to sick days than job losses.

Nick Bunker, chief economist at online job listing company Indeed Inc., likens omicron’s impact to blizzard of 1978, dumped up to 4 meters of snow on his hometown of New England in less than 36 hours and brought weeks of disruption but also a speedy recovery. Only unlike the blizzard and even earlier waves of Covid-19, this variant has quickly become a national event, with new cases hitting 1 million a day last week.

That means “this big shock is huge for the economy and especially the labor market. But then hopefully, like a hurricane, it ends and then goes back to previous trends,” Bunker said.

“Things could only get worse in the near term,” he wrote in a note to clients. Furthermore, “conventional wisdom that omicrons pose no threat to the economy may prove overly optimistic.”

Sick days ‘unprecedented’

Staff shortages continue to disrupt airlines, with Alaska Airlines saying the number of workers is “unprecedented” take sick leave causing the airline to cancel 10% of its flights for the rest of January.

Conor Cunningham, an analyst with MKM Partners, said the real question for the industry is whether it will cause carriers to decelerate their planned 2022 growth rate if it continues into the month. 2 and later.

“My expectation is that other airlines will need to slow down,” Cunningham said.

Read more: The spread of Omicron means more food out of stock at US grocery stores

Some hospitals are at a breaking point, having to deal with many workers are sick or exposed compared to the worst of the pandemic.

“We had more staff because they tested positive and contracted Covid than we did,” said Lynda Shrock, vice president of human resources at Logansport Memorial Hospital in Logansport, Indiana. at the beginning.

Closed shop

On Rodeo Drive in Beverly Hills, luxury retailers Gucci, Hermes and Louis Vuitton have all reported employee cases, according to Los Angeles County’s public list outbreak in the workplace. Walmart Inc. closed at least 60 stores in the US for deep cleaning. Apple Inc locations. was Temporarily closed in dozens of places from Alabama to Florida and New York.

Read more: Hospitals struggle to match Walmart Pay as Omicron employees

James McKenna, president of the Pacific Maritime Association, which negotiates labor agreements for 70 companies in 29 ports on the coast, said West Coast ports, which already face import shipments At the border, 160 people who went ashore have tested positive.

That number speaks of disruption. McKenna added that hundreds of dock workers are staying at home due to contact tracing or awaiting inspections.

McKenna said the backlog of ships out of the ports of Los Angeles and Long Beach, the nation’s busiest, is growing again. “This new variation is so transferable that it changed the game,” he said.

Read more: New York Harbor hustles to cut rare log amid harsh labor woes

In the auto sector, union officials and company representatives said the increase in sick days would not affect production at General Motors Co., Ford Motor Co. and Stellantis NV, owners of the Jeep and Ram brands.

It might just be a matter of time. In a call with reporters on Friday, Scott Keogh, chief executive officer of Volkswagen AG’s US unit, said he had “100%” sure that the industry is about to face production disruptions due to omicrons. “There is no flexible new normal” to assembling a car.

While economists and investors expect the impact to be short-lived, its magnitude can be quite large. Mark Zandi, chief economist at Moody’s Analytics, cut his first-quarter forecast for annual gross domestic product to nearly 2%, down from about 5%. However, he also raised his forecast for the second quarter, saying that businesses and the economy are better prepared to face this new wave.

“I don’t expect this virus to sustainably subtract from economic growth this year,” said Zandi. Although omicrons could affect how the Federal Reserve views the recovery and when it behaves, he said. price increase.

Struggle restaurant

The variation is a blow to industries like hospitality, which have been struggling to return to pre-pandemic employment levels, said Jerry Nickelsburg, department director of the UCLA Anderson Forecast. That will have a longer-term effect on growth because “those sectors are not going to recover as quickly as we previously thought.”

Marshall Weston, president and chief executive officer of the Maryland Restaurant Association, said he spent the week looking for calls from members who are closing for good.

“The recovery for restaurants seems to be happening in reverse rather than forward,” Weston said.

At Ledo Pizza in the DC area, CEO Beall is determined to keep the company his grandfather founded in 1955 alive. He employs 1,300 fewer people than he did before Covid-19 and has adapted by using more automated online systems to fulfill takeout orders and by simplifying menus to Reduce the burden on kitchen staff.

He is also addressing staff shortages at suppliers that are only getting worse with omicron. That means getting smaller amounts of ingredients like mozzarella sticks and waiting longer to get them.

“We’ve seen a lot of things in 66 years,” Beall said. “But this is definitely different.”

–With support from Joe Deaux, Leslie Patton, Gabrielle Coppola, Deena Shanker, Carey Goldberg, Justin Bachman, John Tozzi, David Welch, Keith Naughton and Augusta Saraiva.

© 2022 Bloomberg LP

https://time.com/6137985/omicron-absenteeism-poses-fresh-test-to-u-s-economic-strength/ Omicron’s absenteeism poses a new test of US economic strength

Aila Slisco

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