Simply select text and choose how to share it:. The holiday break was most welcome. However, as millions of us returned to work in early January, we also returned to a new reality.
During the intervening time, the pandemic returned with a vengeance. The new omicron variant, which is highly contagious, has caused a dramatic increase in infections in Europe and North America, with a strong likelihood that the infection rate will rise much higher in North America in the next few weeks.
Although most governments have not imposed significant restrictions on activity and mobility, there is reason to expect that omicron could have negative economic consequences.
With many people getting infected, including those who are vaccinated or who have been boosted, the number of people not reporting to work has increased sharply, especially in critically important industries such as health care and transportation.
If this trend continues, it could limit economic activity and disrupt vital supply chains. Here is what we know so far:. Once omicron has run its course, recent trends are likely to return.
These include decelerating consumer spending on goods as well as improvements in supply chain efficiency and activity. Combined, these factors are likely to help reduce current inflationary pressures. Some participants judged that a less accommodative future stance of policy would likely be warranted and that the Committee should convey a strong commitment to address elevated inflation pressures.
In other words, although the Fed publicly committed to tapering reducing the pace of asset purchases, it had not publicly said anything about reducing the volume of assets.
This new statement, however, suggests that the Fed might consider selling assets such as government bonds and mortgage-backed securities in Investors were surprised by this and, consequently, sold government bonds and equities following the release. Rather, the Fed simply signaled that it is thinking about things in a way that investors did not expect. That is not necessarily a bad thing. It helps to anchor investor expectations about Fed policy and about inflation.
Moreover, the fact that the Fed is thinking about a faster tightening of monetary policy means that, not only is it cognizant about inflation, it also perceives the economy to be relatively strong. This was written before the current surge in omicron-related infections. Their statement was prescient. The US government releases two employment reports : one based on a survey of establishments; the other based on a survey of households.
The establishment survey found that only , new jobs were created in December. Earlier in the week, ADP estimated that there were more than , new private sector jobs created in December.
While the ADP survey and the government report are not always correlated, this gap was quite large. Keep in mind that both reports are based on a survey of a relatively small number of establishments.
Surveys sometimes generate results that are not consistent with the larger reality. That could have been the case with one of these surveys. In any event, the slowdown in job growth which predated the surge in omicron-related infections could reflect the tightness in the job market that was recently revealed in the high number of job vacancies and the persistent weakness in labor force participation.
Meanwhile, the number of jobs created in , 6. Still, by December the number of existing jobs remained 3. Also, one might reasonably assume that, absent the pandemic, the economy would have generated nearly 4 million jobs over the last two years. Thus, it appears that employment in the United States is between 7 and 8 million jobs below the level that would have transpired absent the pandemic.
In other words, there remains a long way to go. The establishment survey also found that the industries that generated the most jobs were leisure and hospitality up 53, in December and professional and business services up 43, Although employment in leisure and hospitality has grown rapidly in the past year as restaurants and hotels have reopened, the industry still employs 1.
In professional and business services our industry , on the other hand, employment is roughly where it was before the pandemic. The establishment survey also reports on wage behavior by industry. The survey found that average hourly earnings in December were up 4. This increase is roughly consistent with underlying core inflation and suggests that, despite a tight labor market, wages are not accelerating.
Nor are wage increases driving inflationary pressure. Yet wage gains varied by industry. For example, average hourly earnings in the leisure and hospitality sector were up In our own professional and business services industry the figure was 6. In manufacturing the figure was 4. The separate survey of households says that there were , more people employed including the self-employed in December than in November.
The survey found that the participation rate was roughly unchanged from November to December, but still far below the prepandemic level.
The unemployment rate fell from 4. The number of people reporting being unemployed fell by , from November to December. Although job growth was modest in December, it seems likely that the Federal Reserve will stick to its plan to reduce asset purchases and begin interest rate normalization in I suspect that, rather than focusing on job growth, the Fed is looking at the sharp decline in the unemployment rate, combined with recent data showing a high number of job vacancies.
Special Focus 1. Real cost of starting and maintaining a business - page 45 2. Export transaction costs in the Philippines — page Congestion in Metro Manila and its impact on the economy - page 34 2. Potential power shortages in Luzon and the way forward — page 40 3. Reviving Philippine electronics exports — page 44 4. Liberalizing rice policy in the Philippines — page 54 5.
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If you arrive late for class, you will be recorded absent unless you have the roll changed before you leave the class. Tentative Course Schedule I. Introduction Aug Classification of Economic Systems-- Gardner, ch. Measuring National Income -- Gardner, ch. Living Standards, Income Inequality-- Gardner, ch.
Unemployment and Inflation-- Gardner, ch. Capitalism-- Gardner, ch. Socialism-- Gardner, ch. Economic Development-- Gardner, ch. Latin America-- Gardner, ch. Introduction to Europe-- Gardner, ch. Great Britain and Germany-- Gardner, ch.
France and Sweden-- Gardner, ch.
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