Yellen noted the variant’s economic impact was still "very uncertain" and the subject of ongoing analysis. But she warned the variant’s spread could exacerbate supply chain issues and an ongoing inflation crisis that has hampered the economic recovery in recent months.
"Hopefully it’s not something that’s going to slow economic growth significantly," Yellen said in an interview with Reuters. The delta variant did unexpectedly prove this fall to really cause some problems. We saw a severe slowdown in economic growth in the United States on account of it."
"There’s a lot of uncertainty, but it could cause significant problems. We’re still evaluating that," Yellen added.
Public health experts are still working to understand the omicron variant, which was first detected in South Africa. The mutant strain of COVID-19 is thought to be highly contagious, and some experts have warned it could evade immunity provided by existing COVID-19 vaccines.
The Biden administration’s plan to combat the COVID-19 pandemic this winter includes an extension of mask requirements on public transportation and an expansion of health insurance coverage of at-home COVID-19 tests.
To date, U.S. authorities have confirmed at least two cases of the Omicron variant. Yellen suggested the Omicron variant’s emergence could prolong the country’s effort to defeat the pandemic.
"Over the summer it really looked promising, as though with increased vaccinations and booster shots, life was returning toward normal," she added. "Now, the new variant, the Omicron variant, the pandemic could be with us for quite some time. Hopefully not completely stifling economic activity, but affecting our behavior in ways that contribute to inflation."