Here's How the Omicron Variant Could Hurt the U.S. Economy
The latest iteration of COVID-19 could have intense economic consequences.
- Experts are keeping a close eye on the omicron variant.
- It's too soon to know what health-related implications might ensue.
- The variant could create shutdowns, affect jobs, and impact the supply chain.
Just when we thought we were making some progress on the COVID-19 front, there's another variant to worry about. Health experts are now tracking the omicron variant, which South African scientists warned the world about last week.
At this point, it's unclear if the omicron variant causes more severe disease -- or how effective vaccines will be against it. But one thing Americans should brace for is a potential hit to the U.S. economy. Here are some of the ways the omicron variant could wreak financial havoc on the nation.
1. Shutdowns could ensue
Early on in the pandemic, many nonessential businesses were forced to shutter temporarily in an effort to limit the spread of COVID-19. So far, President Joe Biden does not seem particularly eager to implement the extreme lockdown measures we saw early on in the pandemic. But we can't completely write off that possibility.
If businesses are forced to shut down, many could end up closing for good. That could impact communities in a negative way and cause local property values to fall.
2. Unemployment could climb
If businesses are forced to close their doors, they're apt to lose out on revenue. And that could lead to higher unemployment numbers after months of improvement.
Even if shutdowns aren't mandated, businesses may be forced to lay off staff if consumers are too skittish to shop and revenues start shrinking. Anyone without three to six months' worth of essential living expenses in a savings account may want to boost their emergency cash reserves sooner rather than later in case layoffs become more common.
3. Supply chains could be further disrupted
Right now, a big reason so many goods cost more is that the demand for them exceeds the available supply. And that's due to snags in global supply chains that we all rely on.
If the COVID-19 situation worsens on a global level, it may result in factory shutdowns and other delays that could make the existing supply chain bottleneck even more extreme. The result? Even higher prices.
It's too soon to panic
The U.S. economy has come a long way since the start of the pandemic, and it's too soon to determine whether the omicron variant will have a significant impact on it or not. But it also never hurts to be financially prepared for things to take a turn for the worse -- whether in the context of COVID-19 or otherwise. For the most part, that means having a solid chunk of money available in an emergency fund to fall back on in the event of job loss or unplanned bills.
Americans may also want to consider joining the gig economy to boost their cash reserves and secure a backup income stream in case their main jobs become compromised. The good news is that there are plenty of options for picking up a side hustle, and doing so could put a lot of people in a much better position to weather the next economic storm.
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