December 7, 2021 – Federal Reserve policy makers worry that the Omicron variant could exacerbate companies’ supply-chain and hiring problems, pushing up prices as a result. The actual outcome could be different, according to the Wall Street Journal.
The pandemic brought on imbalances between supply and demand that have been remarkably persistent. Covid-19 concerns and containment efforts around the world slowed the production of necessary components, disrupted shipping activity and pushed people out of the labor force. At the same time, they sparked a jump in demand for goods that was intensified by several rounds of government relief.
With the rollout of vaccines early this year, policy makers had hoped shortages would ease, but the Delta variant, and the wave of new Covid-19 cases around the world it caused, made a hash of that. And now, just as it seemed that supply chains were getting a little relief, there is Omicron to worry about.
How severe the Omicron wave will turn out to be remains very much unclear, but Fed officials are worried that it might lead to a new round of disruptions that send prices even higher…