Goldman Sachs Lowers 2022 GDP Growth Projections Due To Omicron Variant

Goldman Sachs lowered its 2022 economic growth outlook from 4.2% to 3.8% due to uncertainty surrounding the Omicron variant of COVID-19.

“While many questions remain unanswered, we now think a moderate downside scenario where the virus spreads more quickly but immunity against severe disease is only slightly weakened is most likely,” said Goldman Sachs economist Joseph Briggs in an investor’s note, according to Reuters. Briggs also warned that labor shortages could worsen if employees refuse to work over virus fears; meanwhile, lockdowns in foreign countries could worsen supply chain bottlenecks.

In remarks to Congress, Federal Reserve Chair Jerome Powell likewise said that the Omicron variant strain will cause uncertainty about economic growth and inflation in the coming months.

“The recent rise in COVID-19 cases and the emergence of the Omicron variant pose downside risks to employment and economic activity and increased uncertainty for inflation,” he explained. “Greater concerns about the virus could reduce people’s willingness to work in person, which would slow progress in the labor market and intensify supply-chain disruptions.”

Some American officials have already laid the foundation for additional COVID-19 lockdown measures. For instance, Gov. Kathy Hochul (D-NY) signed an executive order declaring a disaster emergency in New York — giving her the power to postpone elective surgeries, among other actions.

“We continue to see warning signs of spikes in COVID this winter, and while the new Omicron variant has yet to be detected in New York State, it’s coming,” she argued. “Through this action, we will also be able to acquire critical supplies more quickly to combat the pandemic.”

During an interview with ABC News anchor George Stephanopoulos, Dr. Anthony Fauci warned that Americans should “prepare for the worst.”

“We’re seeing these travel bans. Are they going to make any difference?” Stephanopoulos asked.

“You know, it will slow things down, George,” Fauci replied, adding that travel bans are not likely to stop the highly transmissible virus from traveling across borders. “No way that’s going to happen. What you can do is you can delay it enough to get us better prepared. That’s the thing that people need to understand. If you’re going to do the travel ban the way we’ve done now and that we’re implementing right now, utilize the time that you’re buying to fill in the gaps.”

Stephanopoulos asked for Fauci’s advice with respect to travel outside of the United States. 

“Right now people should be prudent,” Fauci replied, noting that any travel during a pandemic posed a risk. “The best way to protect yourself, if you’re going to travel, have to travel, or want to travel, is to get vaccinated and to be prudent when you travel about wearing masks in indoor settings such as if you go to the airport, which is one of the most congregate settings you can imagine. Make sure you wear a mask. Above all vaccination will be the most important way to prevent you from being at such a high risk.”

When asked about the potential return of lockdowns, Fauci said: “I don’t know, George. It’s really too early to say.”

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