Omicron could slow economic growth

Omicron could slow economic growth
Omicron could slow economic growth
John Williams, President of the Federal Reserve Bank of New York, warned that the increase in infections with the new mutation “Omicron” will lead to a slowdown in economic growth in the coming months, which could prolong the supply chain crisis.

In a prepared speech to the Council on Foreign Relations, Williams said that companies may face obstacles in the short term as consumers refrain from many personal activities, in conjunction with companies’ efforts to find employees.

The Federal Reserve member stressed that these disruptions may not be enough to derail the US economy, as it is expected to record 3.5% growth this year, adding that once the “Omicron” wave recedes, the economy will return to recording strong growth.

Regarding inflationary pressures, “Williams” stated that the strong demand for goods and supply bottlenecks pushed inflation to record strong increases, but he added that price pressures may decline with the improvement of supply restrictions, amid expectations that the inflation rate will drop to 2.5 percent this year and 2 percent during 2023.

In his speech, “Williams” touched on the American labor market, where he explained the continued recovery of the labor market with the growth of the economy, noting the possibility of a decrease in unemployment to 3.5 percent this year.

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