Long Covid of the economy.

"The US Federal Reserve may consider slowing the pace of rate increases at its next meeting but that should not be seen as a 'softening' in its commitment to lower inflation, Federal Reserve Gov Christopher Waller said." BT. "Markets should now pay attention to the 'endpoint' of rate increases, not the pace of each move, and that endpoint is likely still 'a ways off', Waller said." "US employers hired more workers than expected in November and raised wages despite mounting worries of a recession," as "Non-farm payrolls increased by 263,000 jobs last month, the Labor Department said in its closely watched employment report. Data for October was revised higher to show payrolls rising 284,000 instead of 261,000 as previously reported." ET. "There were 10.3 million job openings at the end of October," and "The unemployment rate was unchanged at 3.7%." One reason for the shortage of workers is that "Around 16 million working-age Americans (those aged 18 to 65) have long Covid today. Of those, 2 to 4 million are out of work due to long Covid. The annual cost of those lost wages alone is around $170 billion a year (and potentially as high as $230 billion)." Brookings. But, surely if all those people were working and spending their cumulative wages of $170 billion it would worsen the rate of inflation? In a speech at the end of August, Fed Chair Jerome Powell predicted "some pain to households and businesses", meaning closing of small businesses with consequent loss of jobs. CNN. So long Covid has anticipated the Fed. "Following a series of interest rate hikes this year by Fed officials, the unemployment rate could rise as high as 6% next year, according to the Deutsche Bank forecast." CBS. Which implies a loss of 4 million jobs by the end of 2023. "There seems to be three different economies out there," said Ethan Harris, global economist at Bank of America. "You've got a housing market in recession, you've got a consumer who's hanging in, and then you've got a hot labor market." Vox. "Anyone who says they know exactly what is going on in the economy is lying." "Under all of the old rules, some things don't make sense right now, and it's not clear if it will all ever make sense again." Global inflation is cooling. "In the US, so-called core inflation, which excludes food and energy prices, rose a below-forecast 0.2% in October from a month earlier. Euro-zone annual inflation slowed in November by the most since 2020, but still remained elevated at 10%." ET. Adding to the confusion, "The global economy could go back to a low inflation regime," said Prof Raghuram Rajan, adding that "headwinds, including de-globalisation, slow growth in China and K-shaped recovery in emerging economies can hurt growth." TOI. Perhaps actions of people will balance things out. So long as policymakers don't mess up.