Experts Weigh If Omicron Will Impact Inflation

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The US dollar held Wednesday's gains after the Federal Reserve took a more hawkish tilt and indicated it would hike interest rates several times as it tries to combat inflation
The US dollar held Wednesday's gains after the Federal Reserve took a more hawkish tilt and indicated it would hike interest rates several times as it tries to combat inflation

The spread of coronavirus variants in the past two years has had enormous impacts on the economy. While we have reached a more optimistic time in the course of this pandemic, experts say that the rampant spread of the Omicron variant could energize inflation.

As the spread of the virus is thought to keep American consumers purchasing at-home goods rather than engaging in outside services, pressure would be applied on inflation as “supply chains are already overloaded across the globe,” said National Retail Federation’s chief economist Jack Kleinhenz.

“Little is certain about Omicron’s impact on consumer demand," he said. "But people who stay at home because of the variant are more likely to spend their money on retail goods rather than services like dining out or in-person entertainment.”

Kleinhenz clarified, however, that Americans could be more optimistic in spending because of an increase in fully vaccinated citizens, or evidence that the symptoms caused by Omicron are not as severe as previous variants.

Makoto Noji, chief currency and foreign bond strategist at SMBC Nikko Securities Inc. in Tokyo, said that “inflation continues to be the major theme of the market given life with the coronavirus,” as reported by Yahoo Finance

Many retailers nationwide have needed to close locations or decrease hours as they endure a lack of staffing, including Starbucks, Apple, and Nike.

Experts say that the recent wave of coronavirus cases will likely not cause another economic shutdown. 

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