Omicron adds new chapter to Covidonomics textbook

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BofA Global Research with the note:

The impact of Covid on the economy has evolved over time. Here we argue Omicron adds a new chapter to the Covidonomics textbook:

  • Successive waves of Covid are increasingly impacting the supply-side of the economy more than the demand-side.
  • The biggest impact from Omicron will likely be a large temporary loss of workers due to quarantines.
  • The upshot is to extend the period of tight capacity and inflation pressure and add another nudge to Fed rate hikes.

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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.