The spreading omicron variant could bring U.S. economic growth down to 3.8% from 4.2%, Goldman Sachs announced in a weekend note to investors.
Analyst Joseph Briggs told clients that the firm also predicts 2022 growth to fall 2.9% from 3.3% as supply shortages and border closures could lead to disruption to the global supply chain.
That said, the presence of vaccines means that most cities are not likely to see the kind of full-on lockdown that occurred in the spring of 2020.
Briggs said that the new variant is only expected to take a "minor drag" on service spending.
"While many questions remain unanswered, we now think a moderate downside scenario where the virus spreads more quickly but immunity against severe disease is only slightly weakened is most likely," Briggs said in a note first obtained by Reuters.
First identified in South Africa and now present in many parts of the U.S., the omicron variant first sent markets tumbling after many countries started tightening borders on the day after Thanksgiving.
While the situation has since stabilized somewhat, many still predict that the new strain will cause at least some disruption.
On Friday, International Monetary Fund Managing Director Kristalina Georgieva also hinted that its GDP estimates for 2021 would soon be lowered.
"The Omicron crisis helped to magnify several problems that have been brewing for a while," James Deporre wrote for TheStreet's Real Money.
"First and foremost is inflation and the Fed's increased hawkishness. Higher interest rates have a greater impact on growth stocks because, in many cases, significant earnings are far in the future."