While Wall Street is on alert as a new Covid-19 variant spreads, Stifel’s chief economist is hesitant to change her economic outlook.
Lindsey Piegza sees lockdown risks tied to omicron, but she suggests it’s too premature to downgrade forecasts based on them.
“If in fact the variant comes into play and we see very tight policies broad based across the country, we could be talking about a second round recession,” she told CNBC’s “Trading Nation” on Monday. “On the flip side, if policymakers allow the variant to work its course, we could actually see the recovery fare relatively well through the end of the year and into 2022.”
For now, it appears the United States has every intention of keeping the economy open. During a Monday news conference, President Joe Biden indicated the U.S. had no plans to add new travel restrictions to stop the spread.
“I’m cautiously optimistic at this point. Right now, we are seeing the economy on very steady footing,” Piegza said. “We do assume that to be carried through the end of the year.”
2022 may be when the backdrop gets more challenging, according to Piegza. She cites the ongoing reduction in fiscal stimulus as a major factor.
“Even with a solid consumer, we do expect [GDP] growth to slow down to about 2%,” Piegza said. “Growth is still positive, but it’s still very fragile. There’s a number of risks that remain. And, as we continue to see inflation eat into that nominal growth, that’s putting us on a much more uneasy pathway.”
