Covid is once again causing mayhem in the economy.
The disruption is different this time, though. Vaccines and boosters are widely available, symptoms from Omicron appear to be milder than with prior variants, and government officials are vowing not to mandate a shutdown of the economy.
"This is definitely a setback for the recovery," Kathryn Wylde, president and CEO of the Partnership for New York City, an influential business group, told CNN in a phone interview.
With Covid cases spiking, many companies have told office workers to stay home, dashing hopes among bosses and local businesses to have employees back in person this January.
"Everything is up in the air again," said Wylde, who blamed a combination of Omicron and confusion over New York City's vaccine mandate for private sector workers. "The longer this goes on, the harder it will be to get people back in the office."
The Covid chaos is most glaring at airports.
More than 2,000 flights were canceled around the world on Tuesday alone.
Those cancelations, coming at the busiest time of the year for air travel, have been driven in part by a spike in cases among crew members that is putting further strain on a labor shortage in the industry. Combined with severe weather, the problems have caused a nightmare for countless US travelers this holiday season.
"The whole world is weary of this thing. It's leading to international frustration with governments that haven't been able to control it," said David Kelly, chief global strategist at JPMorgan Funds. "This is a virus that is smarter than our political systems."
In a bid to ease the strain on the economy, the US Centers for Disease Control and Prevention on Monday shortened the recommended times that people should isolate after testing positive for Covid-19 if they don't have symptoms.
"We want to get people back to the jobs, particularly the essential jobs, to keep society running smoothly," Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, told CNN's Jim Acosta.
Restaurant slowdown, office shutdowns
Meanwhile, restaurants, among the most adversely effected businesses due to Covid, are under pressure again.
During the week ending November 13, the number of seated diners at US restaurants was down just 5% compared to the same period in 2019, according to OpenTable. But restaurant traffic slowed considerably after the emergence of Omicron in late November. During the week ending December 27, the number of seated diners was down 27% from two years earlier, OpenTable said.
"This isn't just delaying the reopening. It's reversing it, temporarily," said Aneta Markowska, chief economist at Jefferies.
Markowska knows this firsthand. Dozens of employees at Jefferies tested positive for Covid-19 in early December, forcing the Wall Street bank to ask staffers to work from home, stop virtually all business travel and cancel social events.
Office shutdowns like the one at Jefferies also cause cafeteria and other building service workers to go on furlough, deepening the economic impact, Markowska pointed out.
In another sign of the times, major tech companies including Amazon, Facebook and Twitter have also pulled out of attending CES in person next month, dealing a blow to one of the biggest conferences in Las Vegas.
The sports world is also reeling from Covid, with the National Hockey League pausing its season last week and multiple college football games getting canceled due to infections.
Even the New York City subway is cutting back on service due to a shortage of workers caused by Covid.
A weak start to 2022
All of this explains why some economists are downgrading their forecasts for early 2022.
"This will create a very weak moment for the first quarter," Markowska said. She expects the US economy to grow at an annualized pace of just 1.5% in the first three months of 2022, representing the worst quarter since the recovery began in mid-2020. Markowska added that Omicron could cause US payrolls to shrink in January, reversing a string of strong monthly gains.
Mark Zandi, chief economist at Moody's Analytics, told CNN last week that he plans to dim his 2022 economic forecast due to the one-two punch of Omicron and the apparent demise of the Build Back Better Act.
Kelly acknowledged that spending will likely be weaker in early 2022 due to Omicron and the enhanced child tax credit in Build Back Better. "It's not enough to put the economy towards a recession. It just stretches out this last wave of recovery," the JPMorgan strategist said.
Will Omicron cause more supply chain turmoil?
One significant unknown is what the latest spike in Covid-19 cases means for inflation and scrambled supply chains. The Delta wave that emerged earlier this year added significant pressure to supply chains as workers got sick, especially in factories in Asia.
It's too early to tell whether Omicron will unwind some of the recent progress in the supply chain crisis, which has been a major driver of the biggest bout of inflation in the United States in decades.
"A large part of the problem is production issues overseas and a shortage of truck drivers and warehouse workers," said Gus Faucher, chief economist at PNC. "To the extent that Omicron causes people to be unable to work, that does have the potential to exacerbate supply chain issues and push up pricing."
The good news is that Omicron is hitting at a time when pressure typically eases on global supply chains as demand slows in January and February.
"Consumers go into hibernation. That gives everyone a chance to catch up," Kelly said.
'Smaller and smaller impact'
Wall Street is not freaking out about Omicron, at least not anymore.
After a knee-jerk selloff on Black Friday, the US stock market has recovered all its losses. Stocks rose sharply Monday and the S&P 500 could finish at another all-time high Tuesday. That would mark its 70th record-high of the year, according to Bespoke Investment Group.
Ultimately, the impact to the economy, supply chains and daily life will be shaped by how long the Omicron wave lasts — and how society reacts to it. And there is reason to hope Omicron is moving so rapidly that its impact could be relatively short-lived.
Kelly is optimistic about the economy's ability to shrug off Omicron, in part because of Spider-Man. He pointed to how, despite Omicron, "Spider-Man: No Way Home" just became the first film to rake in $1 billion in global sales during the Covid era.
"Clearly, a lot of Americans weren't scared to go to the movies," Kelly said. "With each wave, there is a smaller and smaller impact. Just as the virus has mutated, the economy has adapted to the virus."