The Fed’s high interest rate approach to stemming inflation is about reducing the bargaining power of workers, and especially workers at the lower end of the wage ladder.
The share of unemployment due to people who voluntarily quit their jobs is usually seen as a good measure of labor market strength. It shows people’s confidence that they will quickly find another job after quitting.
We’ve gotten back the vast majority of jobs we lost during the pandemic. The economy is almost back to its pre-recession growth path. It would be a mistake for the Fed to aggressively raise interest rates to counteract inflation.
Recognizing that we still have little basis for assessing virulence, it’s worth considering what it would mean if omicron does spread widely throughout the world.
