Omicron Variant Could Slow US Economic Recovery From COVID-19 Pandemic, Yellen Says

WASHINGTON (Sputnik) - The Omicron variant could slow US economic recovery from the coronavirus pandemic, Treasury Secretary Janet Yellen told a discussion hosted by the news outlet Reuters on Thursday.

“I think we're very uncertain at this point just how significant it is,” Yellen said when asked about the threat to the US economy posed by the newly-discovered coronavirus variant. “There's a lot of uncertainty, but it could, it could cause significant problems.”

The first Omicron case in the United States was reported in California on Wednesday and concerns a fully vaccinated resident who had returned from South Africa, where the variant was first discovered about a week ago. Leong Hoe Nam, a Singapore-based infectious diseases doctor, said Omicron will likely "dominate and overwhelm" the world in 3-6 months. South African health officials have said the Omicron cases are mild.

Yellen compared the potential impact of the Omicron to that of the coronavirus' Delta variant that caused a resurgence in infections and deaths.

“It's accumulating, but hopefully it's not something that's going to slow economic growth significantly, like, you know, the Delta variant did unexpectedly prove,” she said. “This could again exacerbate supply chain and inflation problems. It could depress demand and cause slower growth which would impact inflation the other way.”

The US economy shrank 3.5% in 2020 forced by lockdowns and other pandemic measures. Disruptions in supply chains and the labour market have restrained this year’s recovery, capping growth at an annualized 3.5% in the first quarter, 3.6% in the second and 2.1% in the third.

Inflation itself has reached more than 30-year highs, with the Consumer Index representing a basket of products ranging from gasoline and health care to groceries and rents rising 6.2% during the year to October - its fastest growth since November 1990.