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Hot economy collides with huge virus surge in pandemic’s latest twist

Some businesses are expecting a strong holiday season, while others are closing or seeing cancellations, showing the pandemic’s uneven impact

Centrolina restaurant in downtown D.C. in September 2020. (Scott Suchman for The Washington Post)
9 min

The sudden surge of new coronavirus cases has jolted some parts of the U.S. economy that depend most on face-to-face interactions, while other businesses are preparing for record holiday seasons and so far appear unscathed by the spreading omicron variant.

The impact is uneven but acute. It reflects how some American consumers and business owners have grown accustomed to making instant decisions to cancel their plans, while others are more undeterred after such a long period of setbacks and delays.

In recent days there has been a flurry of other announcements about changes.

Late Friday, the Radio City Rockettes announced they had canceled all of their remaining New York City holiday shows, citing “increasing challenges from the pandemic.” The dance company typically performs multiple shows per day in December. A number of other restaurants and theaters in New York City that rely on big December sales figures are also being forced to temporarily close. But some tourist destinations in Florida are expecting record sales.

Economists and policymakers say it may take weeks for the omicron variant’s full impact to come into view, and the situation is changing rapidly.

Tracking U.S. covid-19 cases, deaths and other metrics by state

Major cities appeared to be the hardest hit so far. Broadway shows including “Hamilton” and “Tina,” about the life of Tina Turner, canceled performances this week because of coronavirus outbreaks and exposure. A Los Angeles theater production of “A Christmas Carol” was canceled Thursday, Friday and Saturday because of a similar outbreak. Some hospitals have canceled elective surgeries to clear space and personnel for covid-19 patients.

Restaurant reservations are declining again, according to the online reservation platform OpenTable, and a growing number of restaurants in New York City are closing because of coronavirus outbreaks among staffers and a lack of workers, according to the New York City Hospitality Alliance. College students and day cares are sending students home to combat outbreaks, but there are signs that people do not plan to stay home for long.

Omicron outbreak inducing whiplash for many Americans

“I know of at least a couple dozen that are shutting down, which is horrible for these restaurants,” said Andrew Rigie, executive director of the NYC Hospitality Alliance. “The holidays are traditionally when many restaurants would earn their profit. This is another gut punch.”

As they have for much of the pandemic, the cancellations are moving through the broader hospitality industry, particularly in large cities. JPMorgan Chase canceled a major in-person health-care conference scheduled to take place in San Francisco next month, and the Cartwright Hotel at Union Square immediately suffered the consequences. Steven Viscio, the hotel’s general manager, compared the conference to the area’s “Super Bowl” in terms of the number of people it would have drawn and the amount of revenue it produces.

The 114-room hotel has roughly 25 employees. Viscio expects housekeeping shifts will stay limited now that the conference is off the book. He was also looking to hire one or two more staff members, but those plans will be delayed.

“Everyone has looked out for each other,” Viscio said. “But it’s still going to be a drain on everybody.”

Millions plan to travel for Christmas, New Year’s as omicron spreads

Since early 2020, the coronavirus moved through the U.S. population in several phases, with covid-19, the disease caused by the virus, killing more than 800,000 people. The virus began its latest surge in recent weeks during a moment when the U.S. economy appeared to have regained its footing, with growth strong and unemployment falling.

But this fragile economy remains vulnerable to sudden shifts in consumer behavior. Some businesses are expecting a strong finish to 2021, while others could be forced to close their doors. The Florida Keys, for example, are preparing for perhaps the busiest holiday season ever, according to the local tourism council.

“The [tourism] numbers for December so far have broken records,” said Andy Newman, spokesman for the Florida Keys tourism council. “To be honest with you, thus far we haven’t seen any significant impact of omicron in terms of cancellations.”

Confirmed U.S. coronavirus infections have increased markedly in the past two weeks. More than 1,200 people die of covid-19 every day. So far, data shows that vaccinations and booster shots protect against severe illness from the variant, but health officials fear a surge in hospitalizations and deaths in areas with low vaccination rates.

Last winter, before vaccines were available, the virus moved with speed and lethality through the United States, particularly as many Americans traveled for the holidays. While millions of Americans are expected to travel in December and January, there are already signs of many people slamming on the brakes.

Hospitalizations rise ahead of holidays

Lauren Randolph, 36, a recipe developer in Los Angeles, had elaborate Christmas travel plans with her husband, Dan Samiljan, 37. They would fly first to Tennessee to visit her family, then peel off to Kentucky to tour distilleries along the Bourbon Trail between Louisville and Lexington. After that, they planned another flight to Boston to visit family. Over the past few days, they have canceled the trip, getting credit for two out of three flights, canceling a car rental and the distillery tours.

“I have grandparents in their 90s, and we decided it just wasn’t worth the risk,” Randolph said. “The past couple years have made us used to going with the flow. No one was mad — our families are understanding people. Instead, we’re staying home and will see a few friends safely outside.”

For some restaurateurs, another coronavirus surge is mixed news. Ashwin Deshmukh owns a chain of six Williamsburg Pizza restaurants as well as a restaurant-bar called Short Stories in New York.

“People always want pizza, and if they’re not going out, they want it even more,” he said. But of the 18 holiday parties he had on the books for Short Stories, 10 have canceled.

“By Monday things started dropping off,” he said. “It could be a $50,000-to-$80,000 hit.”

Nik Sharma was going to have a holiday party there for his consulting firm Sharma Brands. Sharma canceled the party recently but told Deshmukh to keep the $7,500 deposit.

“On Wednesday night I was at the Knicks-Warriors game,” Sharma said, “and I was on my phone getting texts from people asking if the party was still happening. It’s just not a good look to be throwing a party with numbers rising. What if someone’s grandma ends up in the hospital because of this party?”

Consumer interest in catering (measured as viewing business pages or posting photos or reviews) was down 22 percent on Yelp the week of Dec. 6, compared with the same week in 2020. Food delivery service appears to be back on an upswing, with inquiries and reviews up 13 percent during the same period, compared with a year earlier.

It’s particularly challenging timing for the restaurant industry, which is also dealing with worker shortages and food inflation, said Sean Kennedy, executive vice president of public affairs for the National Restaurant Association. Already, 90,000 restaurants have closed permanently or long-term, with an additional 200,000 restaurants still hoping to get pandemic relief money from the federal government.

“Restaurants can only defy the laws of gravity for so long,” Kennedy said. “We are an industry with roughly 16 days of cash on hand and that operates on 3 to 5 percent profit margins. You can change your business model only so much.”

On Tuesday, Erika Polmar, executive director of the Independent Restaurant Coalition, had 903 new emails from restaurateurs in her inbox, she said, all looking for guidance: Did she think there would be additional federal assistance? Did she know a bankruptcy expert? Could she recommend a credit counselor?

“This is the month that folks are hoping for a bump in sales, and they are seeing it slip away,” she said. “A restaurateur in the Northeast called me. He usually does a lot of holiday parties for pharmaceutical companies. They know more than other people, he said, and they are canceling their holiday parties because they are panicked. Parties make up a big portion of holiday business. This is yet another moment where restaurants have to navigate a crisis — and they have nothing left.”

By many measures, the economy had made tremendous strides before the latest surge. Policymakers at the Federal Reserve project the economy will have grown 5.5 percent by the end of the year. The unemployment rate fell to 4.2 percent in November, and most of the major stock market indexes are on track to finish close to 20 percent higher for the year. Retail sales also rose for the fourth straight month in November, with the expectation that consumer spending will remain strong through the holiday season.

Still, health officials warn that the omicron variant could peak in a massive wave of infections as soon as January, putting pressure on strained health systems already grappling with cases of the delta variant. Plus, some policymakers and economists initially underestimated the risks of the delta variant when it began spreading over the summer, only to backtrack as the wave hindered the economic recovery for months. Consumer confidence also plunged in the late summer as people’s renewed fears of the virus held them back from seeking out jobs or limited school openings and child-care options.

At a news conference Wednesday, Fed Chair Jerome H. Powell said the delta variant slowed hiring and constrained global supply chains. But he added that “wave upon wave, people are learning to live with this.” The more people who get vaccinated, the fewer the economic effects subsequent waves of the virus can have, Powell said.

“I just think at this point, we don’t know much,” Powell said Wednesday. “We’ll know a whole lot more in three weeks, and we’ll know more than that in six weeks.”