Weaker Waves

Despite Omicron, I expect 21Q4 GDP to come in at very strong 6.5%. However, the Omicron Variant will reduce 22Q1 GDP growth to about 2.5% from about 5.5% pre-Omicron, a decline one percentage point smaller than the four-percentage point dip in 21Q3 GDP that resulted from the unanticipated arrival of the Delta variant. The smaller decline is because each new wave of Covid is less destructive than the preceding one.