Omicron finds a new way to make an economic mess

<p>Kia ora,</p><p>Welcome to Wednesday’s holiday edition of Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.</p><p>I'm David Chaston and this is the International edition from Interest.co.nz.</p><p>Today we lead this first 2022 review with news that while Omicron is surging, it is having quite different economic impact than Delta.</p><p>But first, the <a href="https://www.globaldairytrade.info/en/product-results/" target="_blank"><strong>first dairy auction of 2022</strong></a> was held earlier today and it was a lackluster affair. Overall prices rose a tad less than +0.3% in USD terms, and fell -0.6% in NZD terms from the prior event. The key WMP price was unchanged but there was another strong move higher for <a href="https://www.interest.co.nz/charts/commodities/dairy-prices" target="_blank"><strong>cheddar cheese</strong></a>, taking it to over NZ$8000/tonne for the first time ever. The global recovery of foodservice activity is helping. SMP (+1.0%) and butter (+0.3%) also recorded gains and in the case of butter it remains near a record high. However none of this will be shifting farmgate milk payout forecasts.</p><p>The Americans have sort of prevailed over Canada in a long-running dispute over Canadian policies aimed at shielding its dairy industry from American competition, according to <a href="https://ustr.gov/sites/default/files/enforcement/USMCA/Canada%20Dairy%20TRQ%20Final%20Panel%20Report.pdf" target="_blank"><strong>a ruling published overnight</strong></a> from the first dispute resolution panel under the new US-Mexico-Canada Agreement. But it wasn't all one-way with the Canadians happy that most of their support program can remain intact.</p><p>The US retail sector seems to have turned in a <a href="https://tradingeconomics.com/united-states/redbook-index" target="_blank"><strong>very positive holiday selling season</strong></a> with sales gains far higher than can be accounted for by price increases.</p><p>US employers are having trouble holding on t