Eyeing an Omicron surge that has exacerbated US labor stress especially in front-line industries, President Joe Biden's administration is betting shorter Covid-19 quarantine times will lessen the economic hit from the latest variant.

The announcement Monday to cut isolation times in half was cheered by airlines and hospitality industries, but sharply criticized by labor unions who question whether public health concerns have been short-changed.

Economists generally offered muted praise as they analyze the Omicron impact, which caused staff shortages that led to thousands of flight cancelations over the holiday weekend, halted theater performances and professional sports competitions, and is expected to slow growth in the first quarter of 2022.

"I don't think the new CDC guidance is going to have a material effect on the economy," Joseph LaVorgna, chief US economist at Natixis. "But it does help at the margin, it has a psychological impact."

The new guidance cuts the isolation period for asymptomatic Covid-19 cases in half to five days followed by five days of wearing a mask when around others.

It is a relief to business that already had been struggling to fill open positions and return to normal.

Houston restauranteur Dimitri Fetokakis, whose three-restaurant chain employs about 120, welcomed the announcement both because of the tight labor pool and as a sign of progress in navigating the pandemic.

"We've got to get on with our lives. We've got to get on with our businesses," he told AFP. "We can't just sit in our homes hiding from this thing."

Surfacing a month ago initially in South Africa, Omicron has led to exponential growth in Covid-19 infections in parts of the United States, renewing the stress on testing infrastructure and exacerbating hospital stresses in some places.

But while more infectious, the new strain appears to cause less serious illness.

Oren Klachkin, lead economist at Oxford Economics, said it is still "early days" to gauge the hit from Omicron, but like others he expects lower first-quarter growth followed by a rebound.

After airlines canceled thousands of flights due to Covid-19 cases, the Biden administration moved to cut the isolation time for Covid-positive workers
After airlines canceled thousands of flights due to Covid-19 cases, the Biden administration moved to cut the isolation time for Covid-positive workers GETTY IMAGES NORTH AMERICA via AFP / Anna Moneymaker

The CDC move "will definitely have an impact and alleviate some of the labor shortage issues that we've seen," Klachkin told AFP.

Andrew Rigie, chair of the New York City Hospitality Alliance, described Omicron as a "gut-punch" to the city's recovery, leading to numerous party cancelations over the festive period, and forcing some restaurants to close because of workers who contracted or were exposed to the virus.

The CDC announcement "allows people to get back out and live their life sooner, which means in many cases they are spending money and going to restaurants," he said.

The most visible hit from Omicron has been in airlines, with carriers canceling thousands of flights over the Christmas holiday weekend, much of it due to illnesses afflicting airline and airport workers.

The CDC won immediate praise from the lobbying group, Airlines for America, as well as Delta Air Lines, which had suggested a five-day isolation period in a letter last week to CDC Director Rochelle Walenskey.

"This is a safe, science-based and more practical approach based on what we now know about the omicron variant," Delta Chief Health Officer Dr. Henry Ting said following the CDC announcement.

"We're learning that while omicron is highly contagious, it also involves a shorter duration of illness and a shorter contagious period compared to previous strains."

But Sara Nelson, president of the Association of Flight Attendants, expressed skepticism about the new guidance, saying adopting the timeframe sought by Delta was "less than reassuring" in terms of public health.

"We said we wanted to hear from medical professionals on the best guidance for quarantine, not from corporate America advocating for a shortened period due to staffing shortages," Nelson said on Twitter.

The shift prompted a similar rift in health care, with the American Hospital Association saying the CDC announcement "will allow health care workers to safely return to caring for patients sooner."

But National Nurses United said a CDC announcement last week shortening the isolation period for nurses to seven days from 10 was made without regard for science or the health of employees and the public."