A one-two punch for the US economy

A one-two punch for the US economy

The outlook for the American economy is suddenly much darker.

Investors around the world sold stocks and oil prices dropped sharply on Monday as Omicron cases surged and governments imposed anti-virus measures that could hamper economic growth. But the US faces a second potential blow after Sen. Joe Manchin, a Democrat, said on Sunday that he will not vote for President Joe Biden’s economic and climate plan.

Dow futures fell 370 points — or more than 1% — by 6:45 a.m. ET on Monday, while benchmark Brent crude was down about 3% at $71 a barrel. Major stock market indexes in Europe and Asia fell by around 2%. “Global markets are pricing in … greater growth concerns on the back of the weekend’s Omicron-related news. Dimmed prospects for the US fiscal package may also be playing a role,” Mohamed El-Erian, chief economic adviser at Allianz, said Monday on Twitter.

For an Omicron preview, look to Europe: The Netherlands is under a strict lockdown. In the United Kingdom, the government has asked people to work from home and it has not ruled out further restrictions before Christmas. Germany, Denmark and Ireland are also taking steps to stem the variant. “Even if booster shots are effective at reducing the medical risks, a rapid spread of Omicron could still overburden health systems and force countries to follow the Netherlands and adopt more economically damaging restrictions,” said Berenberg chief economist Holger Schmieding.