The Truist COVID-19 Economic Tracker will not published every week during the month of December. It will return to a weekly schedule in January 2022.
Trend watch and what's new this week
U.S. virus trends have sharply increased nationally (slide 3) and regionally (slide 6). In a matter of weeks, the omicron variant became the dominant U.S. strain (slide 8), accounting for nearly three quarters of new cases. While omicron appears to be more transmissible than prior strains, the symptoms are reportedly milder.
Still, surging new infections have prompted European governments to re-impose restrictions. The Netherlands has reinstated a strict nationwide lockdown, while Ireland announced an 8 pm curfew for bars and restaurants, and set limits on large gatherings. France and Germany announced travel restrictions for passengers from the United Kingdom. France has also clamped down on holiday events and large gatherings. Canada has paused indoor group events and sports. Israel is once again banning traveling to and from the U.S. or Canada.
Lastly, West coast port congestion has continued to improve in past month (slide 9). This is the combination of fewer inbound container ships, which appears to have peaked in September, and better throughput at the ports. Ultimately, clearing the logjam of container ships at these ports should help reduce the supply shortages that have fanned some of the inflationary pressure in recent months.
Despite rising infections, overall activity levels remain consistent with recent trends and seasonal norms. Accordingly, overall economic activity has likely peak –as it normally does in mid-December –and should taper off quickly near year-end.
We maintain our base case that the U.S. won’t experience lockdowns, which also didn’t occur during last summer’s delta variant surge. That is based on the fact that nearly three quarters of Americans adults are fully vaccinated (over 200 million), and over one-third of adults have already received a booster. Additionally, there are better therapeutics compared to 2020, including two recently approved COVID-19 treatment pills. Both pills are effective against the omicron variant based on recent lab data.
That said, we wouldn’t rule out localized restrictions by certain cities. As we have repeatedly mentioned here, COVID-19 isn’t going away anytime soon, but the world is definitely managing it better.
Last but certainly not least –we wish you and yours happy holidays. We look forward to prosperous 2022!
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