While economists and health officials expect the effects of the Omicron variant to fade in coming months, the illness is for now restraining the economic recovery.
Strum Contracting Co., a Baltimore-based welding and fabrication construction company, had been until early this month working to improve a port in Sparrows Point, south of Baltimore. Then an outbreak of Covid-19 cases among workers caused the company to shut down the project for a week, said company CEO Teaera Strum. The shutdown cost the company about $18,000 in lost revenue, she said.
“When you’re having to quarantine entire crews, that puts you behind schedule,” said Ms. Strum, who added that the company has also struggled to fill openings for welders and a project manager. “Because we do a lot of state and federal work, we still have hard deadlines. So Covid or not, we still have to meet those deadlines.”
Strum’s struggles are representative of a broader problem in the economy: Demand for companies has been solid, if not strong, but supplies—whether of goods or workers—are running tight. Those shortages are stoking inflation.
The forecasting firm IHS Markit projects that output will grow at a 2% annual rate in January through March. That would mark the weakest quarter of growth since the recovery began in mid-2020. The company gave an early peek at economic growth this week when it reported that its index of U.S. services and manufacturing activity—covering most of economic activity—slowed sharply.