Omicron’s business hurts, but will it cause a recession?

The media gives us a detailed report on how Omicron is forcing businesses to close or pivot. And the AFR the main story on the subject today concerns Virgin stopping its only international flight and nine of its domestic flights.

Like most of the affected businesses, the airline faces labor shortages and customer cancellation issues, resulting in “a 25% reduction in the carrier’s schedule in January and February ”, Lucas Baird from AFR reported.

But what is the overall economic effect of this unexpected change in plans during the Christmas holidays? And some wonder if that will cause a recession.

This graph is interesting to give us a clue.

This shows that economic activity (as the blue line shows) is falling with the lockdowns and restrictions related to the virus, but even with the lockdowns in mid-to-late 2021, we haven’t had a recession. And given that we shouldn’t see a lockdown and governments pivot on rules as well as the expected brevity of the Omicron’s effects, we should avoid a recession.

In fact, I think it could only delay the booming big recovery for a month or two.

It is interesting to note that this international service from Sydney to Fiji will be suspended from January 31 and its resumption is scheduled for March 10.

That means the company expects around seven weeks of disruption, which is likely based on speculation by epidemiologists that this variant of the virus will increase in the short term and deplete quickly. Hope they are right.

Helping the economy will be a loosening of the rules, and the AFR Says “Prime Minister Scott Morrison reported on Monday that relaxed isolation rules for food production and distribution staff – close contact with no symptoms that show that a negative test can lead to self-isolation -” would soon extend to that ”.

We’re in “suck and it see” leadership, but that’s all we can expect with the unknowns surrounding Omicron.

News from the owner of Betty’s Burgers, Boost Juice, Salsas and Cibo Espresso – Retail Zoo – which will only close or change the opening hours of up to 20 stores out of a total of 400. That says that a twentieth of the l activity will be significantly affected and this could be a good sign for the overall economy.

Interestingly, Qantas and Rex are not following Virgin’s lead, with the two companies currently being able to juggle their staff to move their business forward, although not as normal. However, this is another case of what we have learned since March 2020, when the coronavirus changed our lives forever and we are all ready to pivot to try to find or move closer to what we thought was normalcy. .

These actions of government leaders, business leaders, employees and even consumers should all merge to protect us from another recession, which will be good for jobs and even, possibly, for stock prices and our super!

About Joel Simmons

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