With each day that passes, we get new information underscoring two things about the Omicron virus: 1) that it proliferates with blistering efficiency, in the vaccinated and unvaccinated; and 2) that it is significantly less likely to lead to hospitalizations or deaths than earlier strains, particularly among the vaccinated.

But what will its effect be on the economy? That one is a harder to fathom. Fortune’s Bernhard Warner reported yesterday that forecasters are clearly marking down their optimistic economic projections. The IMF will release an update Jan. 25 that’s almost certain to back off its roaring October prediction of 4.9% global growth. Goldman Sachs has cut its forecast to 3.8% from 4.2%. Berenberg chief economist Holger Schmieding has said the new strain could shave a full percentage point of eurozone and U.K. growth.

It isn’t just restaurant and retail shut-downs that drive these numbers, but how the virus affects the complex interaction between inflation, labor supply and supply chains. The Fed has been banking on the notion that inflation is temporary—driven by supply chain snafus and labor shortages that will ease as the pandemic recedes. But if the pandemic doesn’t recede, and supply chain problems and labor shortages persist, and they get baked into inflation, then the Fed and other central banks will have to act more aggressively, with predictable consequences.

History is pretty clear on how this sort of cycle plays out. But while the broad pattern is clear, the timing is less so. Does the party end this year? Sometime in 2023? Or could it go on into 2024, and maybe beyond?  

I invite CEO Daily to share their views, and I’ll report back on Friday. Don’t be afraid to weigh in: my guess is CEO Daily readers can do this just as well as the economists mentioned above!

In the meantime, Bitcoin took a beating yesterday, and our Shawn Tully points out that you might have made more money over the last three years investing in the Nasdaq 100.

More news below.

Alan Murray
@alansmurray
alan.murray@fortune.com

TOP NEWS

Coal-powered doom

Partly thanks to a lack of clean-energy legislation (thanks to coal investor Joe Manchin), U.S. coal generation last year surged by 17% and overall U.S. greenhouse gas emissions rose 6.2%. P.S.: The last seven years were the hottest ever recorded, and climate scientists say that data provides "signs of another nail in the planetary coffin." Fortune

Retail disappointments

Lululemon Athletica disappointed Wall Street yesterday with its holiday-season results, which took a hit from Omicron-induced staff shortages and their impact on operating hours in some locations. Other retailers that had to cut store hours for the same reason last month includes Walmart, Apple, Nike, Gap's Athleta, and Starbucks. Fortune

Enough doses?

Israeli infectious diseases specialist Eyal Leshem reckons most people will only need three vaccine doses to protect them against severe COVID. The Sheba Medical Center professor's intervention is the latest in a growing pushback against the idea of ongoing booster campaigns, with even Pfizer's CEO (whose company is developing a "hybrid vaccine" to target Omicron and other variants) urging caution. Fortune

Lockdown mockery

British Prime Minister Boris Johnson is yet again under pressure over boozy government gatherings that occurred in 2020, when the rest of the country was being ordered not to socialize. This time it's a leaked email from his own principal private secretary, sent to over 100 employees, that read: "Hi all, after what has been an incredibly busy period we thought it would be nice to make the most of the lovely weather and have some socially distanced drinks in the No 10 garden this evening. Please join us from 6pm and bring your own booze!" Guardian

AROUND THE WATER COOLER

CEO priorities

Around two-thirds of Brits would rather see CEOs talking about employee conditions and customer service than about social issues, according to new research from Stack Data Strategy and Hanbury Strategy. Nearly a third see ESG issues as a "distraction" for business. However, the research shows that climate change has become a "bread and butter" issue for much of the public, with many seeing it as a needed business focus. Times of London

Russia talks

Yesterday's European-security talks between the U.S. and Russia didn't resolve the countries' differences, but they did at least delay a potential Russian invasion of Ukraine for, er, a few days at least. The Russians are demanding that Ukraine and Georgia "never ever" join NATO, which is a non-starter both politically and logically—today's governments can't dictate what their successors will do. Politico

Fed ethics

Richard Clarida is relinquishing his role as vice chairman of the U.S. Federal Reserve on Friday, two weeks before he was due to hand over to Lael Brainard anyway. Questions have been raised over his financial transactions at the start of the pandemic. Wall Street Journal

IRS chaos

The U.S.'s Internal Revenue Service is "spiraling into chaos" due to COVID, new responsibilities, and years of congressional neglect, writes Fortune's Nicole Goodkind: "The troubles translate into difficulty in processing refunds quickly, auditing returns to catch cheating, and a lack of services to help Americans troubleshoot their filings. The result is lost revenue for the federal government, which depends on the money it collects—more than ​​$4 trillion in fiscal year 2021—to fund everything from the U.S. military to national parks." Fortune

This edition of CEO Daily was edited by David Meyer.