Really, there’s still an awful lot that we don’t know about this highly-mutated strain now running loose through every continent (except Antarctica, those lucky bastards).
You can watch my initial quick take on Omicron’s impact here (though things have changed a bit since I recorded that on Monday):
Omicron is a variant originally found in Botswana and South Africa, thanks to their proactive genomic surveillance infrastructure, much of it built in response to HIV/AIDS. It has an extraordinary number of mutations and doesn’t appear to be a close relative to Delta or any of the other popular variants we’ve heard about over the last year—Alpha, Beta, Gamma. Some of Omicron’s mutations we have seen before, and they are concerning.
There are three basic questions that need to be answered about this variant. We will start to get answers in the next week or two from both lab studies and real-world observation. But consensus may take longer than that. And there may not be a clear-cut yes/no answer to any of them for months. Here are the questions and what we know so far:
Do vaccines (and previous infection) still provide protection? Of all the questions around this variant, this one brings the highest level of confidence from experts. There is growing confidence that the risk of reinfection for the previously infected will go up for this variant. And that means places like Gauteng, South Africa, which had a bad Delta outbreak a few months ago, are susceptible to a bad Omicron outbreak. But most experts suspect vaccines will continue to work, albeit less well. How much less well is unclear. It’s possible they just increase the likelihood that you will get a mild infection and can pass it on to others. That’s not great from a public health perspective—it means that outbreaks are harder to contain, and vulnerable and unvaccinated populations are going to get infected more with possibly dire outcomes. But what about from an individual health perspective? For most people, vaccines should still provide some, possibly strong, protection against severe illness and death. If you’re older or have a weak immune system, this protection from severe illness may be weaker and require more vigilance.
Is this virus going to overtake Delta? Some of the mutations found in Omicron suggest it could be highly transmissible, but that is still speculative, and we don’t know what impact the other new mutations could have on transmissibility. However, evidence from South Africa, where Omicron cases are going up rapidly and Delta cases are going down quickly, is concerning. South Africa could be an exception, or it could be a warning. If reinfection susceptibility and vaccine infection protection go down against Omicron as much as experts fear, this virus doesn’t have to even be as infectious as Delta to outcompete it. So it’s worth watching what happens in South Africa and other countries closely.
Is illness from this variant less, the same, or more severe? Also unclear. Some early stories about a very young group of mostly vaccinated individuals in South Africa only having mild symptoms don’t tell us much—that’s what we would have seen with Delta. And hospitalizations are going up in the outbreak epicenter of Gauteng, South Africa. Not to mention anecdotal evidence of very young children going to the hospital at higher numbers. It’s still early days for this question, and we are still debating it for Delta, so clear answers might not be immediately forthcoming. One important point is that the argument that viruses tend to get less lethal over time is probably wishful thinking. People may be less likely to get very sick over time because of vaccination or infection, but there is no evidence for or strong argument why evolutionary pressure by itself will make this coronavirus less lethal.
Most outbreak response authority lies with states. Americans’ high tolerance to cases and deaths but low patience for lockdowns and mandates have made all states very reluctant to reimpose disruptive restrictions. Republican-led states are almost unmovable in their rejection of mandates, masks, capacity limitations, etc.
The Biden administration is aggressively pushing booster shots and vaccine mandates (some of which may not survive legal challenges), purchasing new treatments from Merck and Pfizer, and trying to address criticism of its significant underperformance on rapid test availability. It’s also dealing with high pandemic fatigue and a sea of misinformation that is presenting further headwinds to a coordinated response.
And all of this is happening amidst the backdrop of a surging outbreak in the colder parts of the country. While the US is a laggard in genomic sequencing, Omicron is not (yet, at least) driving this current surge.
The pandemic was an extraordinary jolt to the US economy, but thanks to large-scale fiscal and monetary support we are now seeing a strong recovery, with GDP on track to grow about 5% in 2021.
However, the path of recovery going forward depends largely on the virus, which affects how we work, what we make and consume, and how we engage in the world. New surges in the virus intensify supply chain disruptions and can affect employment by dampening demand and keeping people from returning to work or looking for a job. While employment has rebounded in the recovery, there are still around 4 million fewer employed than before the pandemic. There are many reasons for this employment gap, but policies will be measured by their success in bringing those workers back into the workforce.
The rise in Delta variant cases temporarily slowed progress this past summer, and the introduction of the Omicron variant is a new and uncertain challenge. There are three broad scenarios for the economic recovery, depending on how Omicron ends up behaving:
Omicron outbreaks turn out to be similar to or milder than Delta in moderately to highly vaccinated areas. Economic momentum will continue uninterrupted. This means growth will remain above potential, labor force participation will keep rising, and supply chain disruptions will slowly but surely keep easing over the course of 2022. Inflation will subside from its current highs but remain above the Federal Reserve’s comfort level. The Fed will continue to gradually withdraw support for the recovery in order to tame inflation expectations and ensure price stability over time.
Omicron turns out to be worse than Delta in some but not all its features (e.g., more severe, more contagious, more vaccine-resistant), triggering more public health restrictions and disrupting production and consumption. Growth will dip briefly, then rebound, and a recovery will be sustained, helped along by a reformulated vaccine rollout in the first half of 2022. In the near term, supply chain disruptions could worsen and increase inflationary pressures. The Fed will stay the course with its plans to gradually withdraw pandemic-era support, and will keep its options open for raising interest rates as it watches how the economy evolves.
Omicron turns out to be significantly worse than Delta, causing a protracted outbreak and triggering highly disruptive restrictions. Growth will take a larger hit as consumer sentiment is dampened, supply chain disruptions worsen, the labor market improvement stalls, and demand softens as efforts to roll out a reformulated vaccine intensify. If the demand shock is large enough, the Fed may decide to slow the pace of monetary tightening until it knows more about the extent of the damage.
This has hurt his effectiveness in Congress, where Democrats are struggling to push his signature spending policies across the finish line. It is also jeopardizing Democrats’ already poor chances in next year’s midterm elections.
Biden has repeatedly said this pandemic is a pandemic of the unvaccinated and the result of President Trump’s “failure of leadership,” but the fact that Americans’ lives are still likely to be disrupted—with travel limited, conferences canceled, and service industries hindered—a year after he won an election on the promise of a “return to normalcy” will be a major headwind for him until this goes away.
Never mind that the federal government has few tools to stop the spread of the virus. Biden’s actions to date—a partial travel ban, new testing and vaccine requirements for travelers to the US, extending a mask mandate on transit, and offering to reimburse the cost of rapid test kits—demonstrate the limits of his powers. His most sweeping proposal, a vaccine or test mandate for large employers, is being challenged in the court and is engendering backlash against him among Republicans and some independents, whose approval ratings for Biden have dropped the most in recent months.
Absent a rapid positive resolution to the Omicron threat, the pandemic will weigh heavily on President Biden’s popularity.
Please share your questions and thoughts in the comments section below.