The U.S. is in the emergent stages of the omicron variant of the coronavirus. However, we now have some experience in what this could mean moving forward, both for the health and economic impact of the U.S. and our global neighbors.
To
continue fighting COVID-19 without shutting down schools and businesses, the
Biden Administration recently announced new guidelines to help contain the
virus. The initiatives include free booster shots for all adults, new
quarantine and testing policies in schools, vaccination or weekly testing
requirements by businesses, free at-home COVID test kits, more resources
allocated to areas with hotspot flare-ups, and greater global distribution of
vaccines to help stop the spread.1
Regardless
of where individuals stand on the debate of mandated vaccines, it is important
to recognize the long-term effects of the continued spread of the virus. The
stock market had a strong negative reaction after the omicron variant was
identified in the U.S. If the virus continues to spread, we will continue
suffering these setbacks. For many, the pandemic is less a health issue than a
financial one. If you are looking for ways to shore up your investment
portfolio to weather the ongoing volatility presented by COVID-19, please give
us a call.
The
following are key economic questions associated with omicron — or any new
variant that develops in the future: 1) What is our capacity to prevent and
contain its spread;2 2) How
susceptible is it to various demographics; and 3) How will it affect our current
vaccination levels and waning immunity?3
A
recent study of the phenomenon presents a variety of possible scenarios. One
positive outcome of omicron is that it motivates more people — and countries —
to higher vaccination levels. If the new variant proves more easily transmitted
than the delta variant, we may need to step up masking and social distancing
measures; even sending workers back to working from home. If the strain proves
to be vaccine-resistant, more resources will need to be dedicated to modifying
messenger RNA vaccines and getting them out to the public as quickly as
possible.
What
about rising inflation? Some economists believe higher prices are directly
linked to global shortages and higher demand — which would abate if omicron
constrained the economy again. However, if inflation is due to monetary and
fiscal stimulus policies, prices could further increase regardless of the
direction of the pandemic.4
Finally,
since vaccine hesitancy appears to be emanating from a lack of trust in the
government, the U.S. may be jeopardized by the threat of growing civil
instability. This has the potential to land us in the same high-risk category
of countries that experience ongoing civil unrest and attempts to overthrow the
government.5
For
America’s health, safety, economic prospects and our own financial portfolios,
let’s hope the issues surrounding COVID-19 do not manifest in these ways.
Content
prepared by Kara Stefan Communications.
1 The White House. Dec. 2, 2021. “President
Biden Announces New Actions to Protect Americans Against the Delta and Omicron
Variants as We Battle COVID-19 this Winter.” https://www.whitehouse.gov/briefing-room/statements-releases/2021/12/02/fact-sheet-president-biden-announces-new-actions-to-protect-americans-against-the-delta-and-omicron-variants-as-we-battle-covid-19-this-winter/.
Accessed Dec. 3, 2021.
2 Andrew Sheets and Matthew Harrison. Morgan
Stanley. Nov. 30, 2021. “Omicron Variant Causes Concern.”
https://www.youtube.com/watch?v=8iJNYWeslf8. Accessed Dec. 3, 2021.
3 Mick Costigan. World Economic Forum. Nov. 30,
2021. “The Omicron variant is here – what comes next? Here are 5
possibilities.” https://www.weforum.org/agenda/2021/11/omicron-whats-next-5-scenarios-to-help-business-leaders-make-the-right-decisions/.
Accessed Dec. 3, 2021.
4 Jeff Cox. CNBC. Nov. 27, 2021. “The current
inflation run is similar to other episodes in history, but with important
differences.” https://www.cnbc.com/2021/11/27/the-current-inflation-run-is-similar-to-other-episodes-in-us-history-but-with-important-differences.html.
Accessed Dec. 3, 2021.
5 Maneet Ahuja. Forbes. Nov. 29, 2021. “Ray
Dalio Says America’s Decline Will Upend Lives, Not Just Portfolios.” https://www.forbes.com/sites/maneetahuja/2021/11/29/ray-dalio-says-americas-decline-will-upend-lives-not-just-portfolios-the-billionaire-investor-paints-a-dire-scenario-in-his-new-book/?sh=4961c9b3c4f0.
Accessed Dec. 3, 2021.
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objectives. This material is intended to provide general information to help
you understand basic financial planning strategies and should not be construed
as financial or investment advice. All investments are subject to risk
including the potential loss of principal. No investment strategy can guarantee
a profit or protect against loss in periods of declining values.
The
information contained in this material is believed to be reliable, but accuracy
and completeness cannot be guaranteed; it is not intended to be used as the
sole basis for financial decisions.
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