Omicron's Emergence

The Greek alphabet has long had reach beyond its original market. Its lettering is commonly used in mathematics: deltas represent differences between two quantities, and pi represents the ratio of a circle’s circumference and its diameter. Certain campus organizations in the United States use trios of Greek letters that represent their mottos or missions. And investment managers seek to generate alpha with their asset allocations.

Because of its resemblance to zero, the Greek letter Omicron (O) does not play much of a role in math or physics. But as of last week, it has emerged as the most prominent letter in the Greek alphabet. Applied to a new mutation of COVID-19, Omicron may become a dominant consideration for public health officials and economists.

Learning to live with COVID-19 was one of four key transitions identified in our economic outlook for 2022. Efforts to eradicate the virus have proven unsuccessful, and the cost of attempting to do so has been dear. Focus has shifted to reducing the risk presented by the pandemic through vaccination and sensible preventative measures. The hope has been that an advancing sense of safety would reduce the need for restrictions on activity.

Progress has certainly been made. We know much more about COVID-19 than we did a year ago, and the medical industry has done amazing work in developing preventative and curative products. Eight billion doses have been administered worldwide, covering 55% of the global population. Among higher-income countries, that figure is 73%, while many developing markets remain far behind the curve.

Weekly Economic Commentary - Chart 1

Clinicians have been able to focus their efforts on the Delta variant, which became the dominant strain worldwide last summer and accounts for almost all new cases. Viruses like COVID-19 are always mutating, but most alterations are minor and benign; global health officials hoped to reduce transmission rates to a point where the odds of a more pernicious variant would be substantially reduced.