The State Government-owned investment manager said the impact from Omicron would be a “big hit to consumption”, but claims of a 30 per cent drop in consumer demand were overstated.

Other economists have also claimed that the economy had reached a point where the Reserve Bank would have to soon make some key decisions, like stopping its quantitative easing measures which have the effect of pumping cash into the economy, and potentially lifting interest rates twice this year.

But the ANZ said at a national level there has not yet been any sign of recovery from the Omicron malaise in spending, with a decline of 27 per cent in the first half of January compared to the first half of December. Previous years showed a 17-21 per cent decline.

“Weakening consumer confidence through the first half of January is another sign that spending could stay low for a while longer,” ANZ said.

However, QIC is an investor in shopping centres and analysed its own data as well as that publicly available from the banks. It found there had been a significant drop in foot traffic of 33 per cent in NSW and 22 per cent across the Australian portfolio over the first two weeks in January. However, it said this was also due to the normal post-Christmas slow-down.

“Based on this data, we estimate consumer activity is around 6 per cent to 7 per cent weaker than it otherwise would have been due to the outbreak in Omicron,” QIC said.

“While there is evidence of a drop in spending relative to historical norms for the first half of January, media reports based on ANZ and other commercial banks’ credit and debit card data grossly overstates the Omicron impact and paint an unnecessarily grim picture of the outlook for retail sales,” QIC said in its latest analysis report.

“Based on the data to date, we estimate that consumer spending could average around 6 per cent lower than usual levels until around mid-February, rather than the 30 per cent reported in the press.

“By mid-February, the Omicron wave should be past its peak, with consumer spending rebounding quickly, as it has done following the Sydney and Melbourne lockdowns of this past winter and following the Victorian lockdown of 2020.

“As a result, we estimate the impact of the Omicron outbreak to be around a 3 per cent hit to household consumption in the March 2022 quarter.

“While this is a large hit to consumption, it is less severe than during the Delta outbreak and would unlikely to be enough to send GDP growth into negative in the quarter.”

Other economic data shows the economy has significant momentum. Unemployment is below 5 per cent and the Commonwealth Bank estimated that household savings were about $260 billion.