U.S. economy slows sharply during omicron wave

Record spread of new coronavirus strain exacerbates labor and supply shortages

The U.S. economy dropped down to a slower gear in January amid a record outbreak of coronavirus cases that intensified labor and supply shortages, according to pair of IHS Markit surveys of senior business executives. A “flash” index of service-oriented companies tumbled to an 18-month low of 50.9 from 57.6 in the final month of 2021, IHS Markit said. A similar gauge of manufacturers dropped to 55 from 57.7 in December — a 15-month low. The flash IHS surveys give the first clear indication of the damage done to the U.S. economy in the first month of the new year.

Any reading above 50 means businesses are growing and numbers above 55% are quite healthy. Yet conditions aren’t as good as they were last fall, no thanks to the latest strain of the coronavirus. “Labor shortages, employee absences and the omicron wave reportedly weighed on growth,” IHS Markit said.