awaiting Senate confirmation, is the latest economic test that he has had to contend with during his tenure.

Mr. Powell, 69, began his first four years as Fed chair in early 2018. By that Christmas, the central bank’s campaign of steady rate increases intended to fend off inflation had collided with President Donald J. Trump’s trade war to send markets plummeting.

In 2019, Mr. Trump publicly pushed for lower rates and accosted Mr. Powell — whom the president had chosen to lead the central bank — in interviews and on Twitter, calling him a “bonehead,” an “enemy” and a golfer who could not putt.

Then came the onset of the pandemic in 2020, and Mr. Powell and his colleagues crossed red lines and upended norms to rescue markets and the economy. They averted a financial crisis, but 2021 brought with it a new challenge: rapid inflation.

Now, critics are questioning whether the monetary help that Mr. Powell’s Fed unleashed to protect the pandemic-stricken economy — lowering rates to near zero and buying trillions of dollars in government bonds — combined with huge fiscal stimulus to supercharge demand and release an inflationary genie that could prove hard to trap.

The Fed has already begun removing some of that support, stopping bond purchases and communicating plans to raise interest rates by a quarter-point this month and steadily throughout the rest of the year. Mortgage rates have already begun climbing in anticipation of those actions.

wanted to see full employment return before paring back its support, has been too slow to react to changing conditions.

This moment “represents a decade of economic experience in the late 1960s and 1970s, compressed into a year,” said Lawrence H. Summers, a former Treasury secretary who spent last year warning that inflation was going to take off as the government overstimulated the economy.

“The question is: Is this the Fed’s Paul Volcker moment, or is this the Fed’s Arthur Burns moment?” he said.

Mr. Burns preceded Mr. Volcker as Fed chair and was late to react to fast inflation, afraid of slowing the job market and hurting Republicans politically. Mr. Summers warned that so far, today’s situation looked more Burns than Volcker, because the Fed spent 2021 only slowly adjusting to the reality of inflation and is now planning to only steadily adjust policy.

While White House and Fed officials had expected inflation to fade last year, optimistically labeling it “transitory,” their hopes were foiled as rapid consumer demand for couches, cars and other goods collided with pandemic-constrained supply chains. Price gains accelerated rather than slowing down.

“Transitory” has now become a dirty word in policymaking circles. Though officials continue to predict that inflation will moderate, they acknowledge more clearly how uncertain that is.

“We have never put our economy into a deep freeze and then defrosted it before,” said Megan Greene, a senior fellow at a Harvard Kennedy School center and chief global economist for the Kroll Institute. “And we haven’t had a war in continental Europe for a while.”

in Shanghai and Shenzhen, China, a major technology manufacturing hub and port city, are boosting the risk that supply chains remain roiled in the coming months. Those shocks from outside come when price pressures have already begun broadening to categories like rent, another development that could make inflation last.

It is not clear whether those factors will keep inflation drastically higher, but Fed officials will be watching warily.

If the Fed has to raise interest rates to painful levels to cool off the economy and put a lid on prices, it could send financial markets tumbling, erasing stock and housing wealth. It could also slow wage increases and throw people out of jobs as companies retrench, curtailing investment and hiring.

But Fed inaction — or under-action — would also carry risks. High prices that chip away at consumer buying power year after year would make it hard for families and businesses to plan for the future. They could especially hurt people who are out of work and living on savings, or the poor, who devote a big chunk of their budgets to necessities and have less room to cut back if costs get out of control.

Mr. Volcker, Mr. Powell’s long-ago predecessor, one of his professional idols and — potentially, if things go wrong — his muse, died in 2019. But he had thoughts on the trade-off.

Maintaining confidence that a dollar will be able to buy tomorrow what it can today “is a fundamental responsibility of monetary policy,” Mr. Volcker wrote in his 2018 memoir. “Once lost, the consequences can be severe and stability hard to restore.”

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Inflation Rises to 7.9 Percent for February 2022

Prices climbed at the fastest pace in decades in the month leading up to the war in Ukraine, underlining the high stakes facing the United States — along with many developed economies — as the conflict promises to drive costs higher.

The Consumer Price Index rose by 7.9 percent through February, the fastest pace of annual inflation in 40 years. Rising food and rent costs contributed to the big increase, the Bureau of Labor Statistics said, as did a nascent surge in gas prices that will become more pronounced in the March inflation report.

The February report caught only the start of the surge in gas prices that came in response to Russia’s invasion of Ukraine late last month. Economists expect inflation to pick up even more in March because prices at the pump have since jumped to record-breaking highs. The average price for a gallon of gas was $4.32 on Thursday, according to AAA.

Rapidly climbing costs are hitting consumers in the pocketbook, causing confidence to fall and stretching household budgets. Rising wages and savings amassed during the pandemic have helped many families continue spending despite rising prices, but the burden is falling most intensely on lower-income households, which devote a big chunk of their budgets to daily necessities that are now swiftly becoming more expensive.

signaled it will raise interest rates by a quarter percentage point at its meeting next week, probably the first in a series of moves meant to increase the cost of borrowing and spending money and slow down the economy. By reducing consumption and slowing the labor market, the Fed is able to take some pressure off inflation over time.

Broadening price pressures and high gas costs could become a serious issue for central bank policymakers if they help convince consumers that the run-up in prices will last. If people begin expecting inflation, they may change their behavior in ways that make it more permanent: accepting price increases more readily, and asking for bigger raises to keep up.

“It was another bad report,” said Laura Rosner-Warburton, senior economist at MacroPolicy Perspectives. “Inflation was already way too high before the invasion of Ukraine.”

keep shipping routes tangled and parts scarce. Ukraine is an important producer of neon, which could keep computer chips in short supply, perpetuating the shortages that have plagued automakers. Higher energy costs could ricochet through other industries.

Even without further supply chain troubles, there are signs that inflation is widening beyond a few pandemic-affected sectors, an indication that they could last as the latest virus surge fades from view. Rent of primary residences, for instance, climbed by 0.6 percent from the prior month — the fastest monthly pace of growth since 1999.

Price gains have been rapid around much of the world, causing many central banks to scale back how much help they are providing to their economies. The European Central Bank on Thursday decided to speed up its exit from its bond-buying program as it tries to counter rising inflation. Europe’s push to end its energy dependence on Russia promises to raise costs at a time when inflation is already nearly triple the central bank’s target.

a separate inflation index, but one that is also up considerably.

loss of purchasing power over time, meaning your dollar will not go as far tomorrow as it did today. It is typically expressed as the annual change in prices for everyday goods and services such as food, furniture, apparel, transportation and toys.

For someone who was a longtime Manhattanite, that’s a real loss, Mr. Gutbrod, 61, said. He used to enjoy three restaurant brunches or dinners each week. Now it’s more like one every two weeks.

“I used to go on relaxing drives,” he said, but now joy rides are unaffordable. “I’m on a shoestring budget, and I work pretty hard. For anyone who doesn’t make a lot of money, you have to be intelligent and start cutting corners.”

As it disturbs everyday lives, inflation is likely to dog Democrats and the administration as they fight to retain control of Congress in November. Despite plentiful jobs and quickly rising wages, consumer confidence has fallen to itslowest level since the summer of 2011, when the economy was clambering back from the global financial crisis and Congress was bickering over lifting the nation’s debt ceiling.

That probably at least partly reflects the reality that pay is not quite keeping up with inflation for the typical worker, and that consumers are paying more at the pump, which tends to be a very salient cost for Americans.

In February, the cost of food rose, which is also difficult for consumers on tight budgets. Over the past year, grocery prices have increased by 8.6 percent, the largest yearly jump since the period ending in April 1981. Fresh fruit and dairy products became notably more expensive last month.

The White House has emphasized that it is trying to offset rising costs to the degree that it can.

“We’ve taken steps to address bottlenecks in the supply chain, to reduce those bottlenecks,” Jen Psaki, the White House press secretary, said this week.

But those changes have mostly helped around the edges, and as prices have shown little sign of moderating on their own, Fed officials have coalesced around the view that they will need to use their policies to cool off demand and keep today’s rapid inflation from becoming entrenched. That may limit the central bank’s room to react to any slowdown in growth prompted by uncertainty and high gas prices.

“They need to stay on track,” said Ms. Rosner-Warburton. “They don’t have as much leeway to respond to these risks, given how elevated inflation is.”

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Rising Gas Prices Have Drivers Asking, ‘Is This for Real?’

After months of working from home, Caroline McNaney, 29, was excited about going back to work in an office, even if her new job in Trenton, N.J., meant commuting an hour each way.

But when she spent $68 filling the tank of her blue Nissan Maxima this week, she felt a surge of regret about switching jobs.

“Is this for real?” Ms. McNaney recalled thinking. “I took a job further from home to make more money, and now I feel like I didn’t do anything for myself because gas is so high.”

The recent rise in gas prices — which the war in Ukraine has pushed even higher — has contributed to her sense of disappointment with President Biden. “I feel like he wants us to go out and spend money into the economy, but at the same time everything is being inflated,” she said.

higher heating bills. Natural gas reserves are running low, and European leaders have accused Russia’s president, Vladimir V. Putin, of reducing supplies to gain a political edge.

While oil prices worldwide have shot up since the Russian invasion of Ukraine, President Biden and Democrats, who hold control of Congress, have faced consumers’ ire.

Cat Abad, 37, who lives in the San Francisco area, where prices have hit nearly $6 for the highest-grade gas, said she saw stickers on the pumps at one local station saying that Mr. Biden was responsible for the rise. She took the stickers off, she said, believing that he was not at fault.

Still, she said, “It’s a good time to have a Prius,” as she filled up for her commute down the peninsula to Foster City.

Inflation is already proving a perilous issue for Mr. Biden and fellow Democrats as the midterm elections approach, with many voters blaming them for failing to control the rising cost of living. The higher gas prices add further political complexity for Mr. Biden, who has vowed to curb the nation’s dependence on fossil fuels.

In light of the war in Ukraine, the energy industry is pushing the Biden administration to support more domestic oil production by opening up drilling in federal lands and restarting pipeline projects.

“This moment is a reminder that oil and natural gas are strategic assets and we need to continue to make investments in them,” said Frank Macchiarola, a senior vice president at the American Petroleum Institute, a trade group.

There is a chance that the strain on consumers may be temporary as global oil supply and demand are rebalanced. And, in the near term, lower consumer spending may have some benefits. Reduced spending could help constrain inflation, but at the expense of slower economic growth.

Even before Russia invaded Ukraine, rapidly rising energy prices were contributing to the fastest inflation in 40 years. Energy prices — including not just gasoline but home heating and electricity as well — accounted for more than a sixth of the total increase in the Consumer Price Index over the 12 months ending in January.

The recent jump in energy prices will only make the problem worse. Forecasters surveyed by FactSet expect the February inflation report, which the Labor Department will release on Thursday, to show that consumer prices rose 0.7 percent last month, and are up 7.9 percent over the past year. The continued run-up in gasoline prices over the past week suggests overall inflation in March will top 8 percent for the first time since 1982.

Some drivers said the higher gas prices were a necessary result of taking a hard line on Mr. Putin.

Alan Zweig, 62, a window contractor in San Francisco, said: “I don’t care if it goes to $10 a gallon. It’s costing me dearly, but not what it’s costing those poor people in Ukraine.”

Destiny Harrell, 26, drives her silver Kia Niro hybrid about 15 minutes each day from her home in Santa Barbara to her job at a public library. She is now considering asking her boss if she can spend some days working from home.

She said the rise in prices has contributed to her anger at Mr. Putin and his decision to invade Ukraine.

“It’s super frustrating that a war that shouldn’t even really affect us has global reach.”

Ben Casselman, Coral Murphy Marcos and Clifford Krauss contributed reporting.

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Federal Reserve Not Likely to Change Course After Ukraine Invasion

Federal Reserve officials are turning a wary eye to Russia’s invasion of Ukraine, though several have signaled in recent days that geopolitical tensions are unlikely to keep them from pulling back their support for the U.S. economy at a time when the job market is booming and prices are climbing rapidly.

Stock indexes are swooning and the price of key commodities — including oil and gas — have risen sharply and could continue to rise as Russia, a major producer, responds to American and European sanctions.

That makes the invasion a complicated risk for the Fed: On one hand, its fallout is likely to further push up price inflation, which is already running at its fastest pace in 40 years. On the other, it could weigh on growth if stock prices continue to plummet and nervous consumers in Europe and the United States pull back from spending.

The magnitude of the potential economic hit is far from certain, and for now, central bank officials have signaled that they will remain on track to raise interest rates from near-zero in a series of increases starting next month, a policy path that will make borrowing money more expensive and cool down the economy.

invasion could disrupt the post-Cold War world order and warned that the jump in energy prices and fallout from sanctions “will complicate the ability of central banks on both sides of the Atlantic to engineer a soft landing from the pandemic inflation surge.”

Economists have been warning that a “soft landing” — in which central banks guide the economy onto a sustainable path without causing a recession — might be difficult to achieve at a time when prices have taken off and monetary policies across much of Europe and North America may need to readjust substantially.

“The shock of war adds to the enormous challenges facing central banks worldwide,” Isabel Schnabel, an executive board member at the European Central Bank, said during a Bank of England event on Thursday. She added that policymakers are monitoring the situation in Ukraine “very closely.”

Inflation is high around much of the world, and though it is slightly less pronounced in Europe, and E.C.B. policymakers are reacting more slowly to it than some of their global counterparts, recent high readings there have prompted some officials to edge toward policy changes.

dizzying spikes in prices for energy and food and could spook investors. The economic damage from supply disruptions and economic sanctions would be severe in some countries and industries and unnoticed in others.

“The current situation is different from past episodes when geopolitical events led the Fed to delay tightening or ease because inflation risk has created a stronger and more urgent reason for the Fed to tighten today,” researchers at Goldman Sachs wrote in an analysis note.

Plus, with wages rising and consumers increasingly expecting high inflation in the coming years, the fact that the conflict has the potential to further elevate prices could strike the central bank as problematic.

“Further increases in commodity prices might be more worrisome than usual,” they wrote.

Some economists warned that the Russian invasion in some ways echoed the inflationary episode of the 1970s: Back then, price increases were already rapid, and a sharp oil price increase pushed inflation up further and made it stick around. The Arab oil embargo of 1973-74 and the Iranian revolution of 1979 both contributed to an oil supply shortage.

“There is something eerily reminiscent of the 1970s and the surge in energy prices associated with Russia’s invasion of the Ukraine,” Diane Swonk, chief economist at Grant Thornton, wrote on Twitter Thursday. “It couldn’t happen at a worse time as it is pouring fuel over an already kindled fire of inflation.”

Economists have released varying estimates of how much an oil price shock could bolster inflation in the coming months.

If oil increases to $120 per barrel by the end of February, past the $95 mark it hovered around last week, inflation as measured by the Consumer Price Index could climb close to 9 percent in the next couple of months, instead of a projected peak of a little below 8 percent, said Alan Detmeister, an economist at UBS who formerly led the prices and wages section at the Fed.

The Goldman researchers said that as a rule of thumb, a $10 per barrel increase in the price of oil would increase headline inflation in the United States by about a fifth of a percentage point, and lowers gross domestic product growth by just under 0.1 percentage point.

“The growth hit could be somewhat larger if geopolitical risk tightens financial conditions materially and increases uncertainty for businesses,” they wrote.

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What the Conflict in Ukraine Means for the U.S. Economy

Russia’s threatened invasion of Ukraine could have economic repercussions globally and in the United States, ramping up uncertainty, roiling commodity markets and potentially pushing up inflation as gas and food prices rise around the world.

Russia is a major producer of oil and natural gas, and the brewing geopolitical conflict has sent prices of both sharply higher in recent weeks. It is also the world’s largest wheat exporter, and is a major food supplier to Europe.

The United States imports relatively little directly from Russia, but a commodities crunch caused by a conflict could have knock-on effects that at least temporarily drive up prices for raw materials and finished goods when much of the world, including the United States, is experiencing rapid inflation.

Global unrest could also spook American consumers, prompting them to cut back on spending and other economic activity. If the slowdown were to become severe, it could make it harder for the Federal Reserve, which is planning to raise interest rates in March, to decide how quickly and how aggressively to increase borrowing costs. Central bankers noted in minutes from their most recent meeting that geopolitical risks “could cause increases in global energy prices or exacerbate global supply shortages,” but also that they were a risk to the outlook for growth.

contending with quickly rising prices, businesses are trying to navigate roiled supply chains and people report feeling pessimistic about their financial outlooks despite strong economic growth.

“The level of economic uncertainty is going to rise, which is going to be negative for households and firms,” said Maurice Obstfeld, a senior fellow at the Peterson Institute for International Economics, noting that the effect would be felt most acutely in Europe and to a lesser degree in the United States.

A major and immediate economic implication of a showdown in Eastern Europe ties back to oil and gas. Russia produces 10 million barrels of oil a day, roughly 10 percent of global demand, and is Europe’s largest supplier of natural gas, which is used to fuel power plants and provide heat to homes and businesses.

The United States imports comparatively little Russian oil, but energy commodity markets are global, meaning a change in prices in one part of the world influences how much people pay for energy elsewhere.

It is unclear how much a conflict would push up prices, but energy markets have already been jittery — and fuel prices have risen sharply — on the prospect of an invasion.

loss of purchasing power over time, meaning your dollar will not go as far tomorrow as it did today. It is typically expressed as the annual change in prices for everyday goods and services such as food, furniture, apparel, transportation and toys.

If a conflict drives global uncertainty and causes investors to pour money into dollars, pushing up the value of the currency, it could actually make United States imports cheaper.

Other trade risks loom. Unrest at the nexus of Europe and Asia could pose risk for supply chains that have been roiled by the pandemic.

Phil Levy, the chief economist at Flexport, said that Russia and Ukraine were far less linked into global supply chains than a country like China, but that conflict in the area could disrupt flights from Asia to Europe. That could pose a challenge for industries that move products by air, like electronics, fast fashion and even automakers, he said at an event at the National Press Foundation on Feb. 9.

“Air has been a means of getting around supply chain problems,” Mr. Levy said. “If your factory was going to shut because you don’t have a key part, you might fly in that key part.”

Some companies may not yet realize their true exposure to a potential crisis.

Victor Meyer, the chief operating officer of Supply Wisdom, which helps companies analyze their supply chains for risk, said that some companies were surprised by the extent of their exposure to the region during the Russian invasion of Ukraine in 2014, when it annexed Crimea.

Mr. Meyer noted that if he were a chief security officer of a company with ties to Ukraine, “I would militate rather strongly to unwind my exposure.”

There could also be other indirect effects on the economy, including rattling consumer confidence.

Households are sitting on cash stockpiles and probably could afford higher prices at the pump, but climbing energy costs are likely to make them unhappy at a moment when prices overall are already climbing and economic sentiment has swooned.

“The hit would be easily absorbed, but it would make consumers even more miserable, and we have to assume that a war in Europe would depress confidence directly too,” Ian Shepherdson at Pantheon Macroeconomics wrote in a Feb. 15 note.

Another risk to American economic activity may be underrated, Mr. Obstfeld said: The threat of cyberattack. Russia could respond to sanctions from the United States with digital retaliation, roiling digital life at a time when the internet has become central to economic existence.

“The Russians are the best in the world at this,” he said. “And we don’t know the extent to which they have burrowed into our systems.”

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Pandemic’s Economic Impact Is Easing, but Aftershocks May Linger

The pandemic’s grip on the economy appears to be loosening. Job growth and retail spending were strong in January, even as coronavirus cases hit a record. New York, Massachusetts and other states have begun to lift indoor mask mandates. California on Thursday unveiled a public health approach that will treat the coronavirus as a manageable long-term risk.

Yet the economy remains far from normal. Patterns of work, socializing and spending, disrupted by the pandemic, have been slow to readjust. Prices are rising at their fastest pace in four decades, and there are signs that inflation is creeping into a broader range of products and services. In surveys, Americans report feeling gloomier about the economy now than at the height of the lockdowns and job losses in the first weeks of the crisis.

In other words, it may no longer be that “the virus is the boss” — as Austan Goolsbee, a University of Chicago economist, has put it. But the changes that it set in motion have proved both more persistent and more pervasive than economists once expected.

“I — totally naïvely — thought that once a vaccine was available, that we were six months away from a complete re-evaluation of the economy, and instead we’re just grinding it out,” said Wendy Edelberg, director of the Hamilton Project, an economic policy arm of the Brookings Institution. “A switch didn’t get flipped, and I thought it was going to.”

computer chips, lumber and even garage doors have held up production of items from cars to houses, while a lack of shipping containers has led to delays in almost anything transported from overseas. Some bottlenecks have let up in recent months, but logistics experts expect it to take months if not years for supply chains to run smoothly again.

disproportionate share of them women — have not.

Diahann Thomas was at work at a Brooklyn call center in January when she got a call from her son’s school: Her 11-year-old had been exposed to a classmate who had tested positive for Covid-19, and she needed to pick him up.

“There are all these moving parts now with Covid — one moment, they’re at school, the next moment they’re at home,” she said.

Ms. Thomas, 50, said her employer declined to provide flexibility while her son was in quarantine. So she quit — a decision she said was made easier by the knowledge that employers are eager to hire.

“It did boost my confidence to know that at the end of this, it’s not going to be difficult for me to pick up the pieces, and I have more bargaining power now,” she said. “There is this whole entire shift in terms of employee-employer relationship.”

Ms. Thomas expects to return to work once school schedules become more reliable. But the pandemic has shown her the value of being at home with her three children, she said, and she wants a job where she can work from home.

Whether and how people like Ms. Thomas return to work will be crucial to the economy’s path in coming months. If workers flood back to the job market as school and child care becomes more dependable and health risks recede, it will be easier for manufacturers and shipping companies to ramp up production and deliveries, giving supply a chance to catch up to demand. That in turn could allow inflation to cool without losing the economy’s progress over the past year.

care for children may not go back to work right away, or may choose to work part time. And other changes may be similarly slow to reverse: Companies that were burned by shortages may maintain larger inventories or rely on shorter supply chains, driving up costs. Workers who enjoyed flexibility from employers during the pandemic may demand it in the future. Rates of entrepreneurship, automation and, of course, remote work all increased during the pandemic, perhaps permanently.

Some of those changes could lead to higher inflation or slower growth. Others could make the economy more dynamic and productive. All make it harder for forecasters and policymakers to get a clear picture of the postpandemic economy.

“In almost every respect, economic ripple effects that we might have expected to be temporary or short-lived are proving to be more long-lasting,” said Luke Pardue, an economist for Gusto, a payroll platform for small businesses. “The new normal is looking a lot different.”

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Modern Monetary Theory Got a Pandemic Tryout. Inflation Is Now Testing It.

The problem is that the alternative to a Fed response is, at the moment, not obvious. The Biden administration’s attempts at tamping down price increases — longer port hours, release of strategic petroleum reserves, calling out corporate price gouging — have mostly tinkered around the edges of the issue.

Those kinds of precise moves to counter inflation are what M.M.T. economists would recommend, though. Ms. Kelton laid out other suggestions M.M.T. economists have made in a recent blog post. Among them: Medicare for All, cutting the Pentagon budget, repealing some tariffs and unclogging the ports.

Not exactly “easy peasy,” to borrow a phrase of hers.

“M.M.T. was already pretty marginal,” said Jason Furman, a Harvard economist, noting that, in his view, most policymakers and prominent academics ignored it already. Even if policy in the pandemic effectively embraced the idea that you do not have to pay for your spending, that idea, he said, was also Keynesian.

And the M.M.T crowd, while dismissing the Fed’s role, has not come up with a clear and obviously workable idea for how to stem inflation, he argued, adding, “If you were open-minded, this would discredit it still further.”

In Washington, the suite of ideas has clearly been dealt a setback. Deficit concerns have returned. Mr. Biden’s sweeping policy agenda has not passed because Senator Joseph Manchin, a West Virginia Democrat and member of his own party, has opposed it on concerns about government debt and inflation.

Despite that, some of M.M.T.’s proponents are still sounding celebratory.

“We’ve won the debate on the intellectual level — there are no flaws,” Mr. Wray said.

Flaws or not, there are questions.

Questions like: “Did Congress ‘experiment’ with MMT, and does the run-up in inflation mean that MMT has ‘failed’?”

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Why the January Jobs Report May Disappoint, and Is Sure to Perplex

The January jobs report is arriving at a critical time for the U.S. economy. Inflation is rising. The pandemic is still taking a toll. And the Federal Reserve is trying to decide how best to steer the economy through a swirl of competing threats.

Unfortunately, the data, which the Labor Department will release on Friday, is unlikely to provide a clear guide.

A slew of measurement issues and data quirks will make it hard to assess exactly how the latest coronavirus wave has affected workers and businesses, or to gauge the underlying health of the labor market.

“It’s going to be a mess,” said Skanda Amarnath, executive director of Employ America, a research group.

on Twitter and in conversations with reporters that a weak January jobs number would not necessarily be a sign of a sustained slowdown.

Economists generally agree. Coronavirus cases have already begun to fall in most of the country, and there is little evidence so far that the latest wave caused lasting economic damage. Layoffs have not spiked, as they did earlier in the pandemic, and employers continue to post job openings.

“You could have the possibility of a payroll number that looks really truly horrendous, but you’re pulling on a rubber band,” said Nick Bunker, director of economic research for the job site Indeed. “Things could bounce back really quickly.”

loss of purchasing power over time, meaning your dollar will not go as far tomorrow as it did today. It is typically expressed as the annual change in prices for everyday goods and services such as food, furniture, apparel, transportation and toys.

Economists typically pay more attention to the survey of businesses, which is larger and seen as more reliable. But some say they will be paying closer attention than usual this month to the data from the survey of households, because it will do a better job of distinguishing between temporary absences and more lasting effects from Omicron, such as layoffs or postponed expansions.

But economists have also cautioned not to minimize the impact that even temporary absences from work could have on families and the economy, especially now that the government is no longer offering expanded unemployment benefits and other aid.

“There isn’t that much Covid relief funding sloshing about anymore, so absences from work may actually reflect a meaningful decline in income,” said Julia Pollak, chief economist at the employment site ZipRecruiter.

Even in normal times, January jobs data can be tough to interpret. Retailers, shippers and other companies every year lay off hundreds of thousands of temporary workers hired during the holiday season. Government statisticians adjust the data to account for those seasonal patterns, but that process is imperfect. January is also the month each year when the Labor Department incorporates long-run revisions and other updates to its estimates.

“January is a messy month as it is,” Mr. Amarnath said.

This year, it could be extra messy because the pandemic has disrupted normal seasonal patterns. The labor shortage led some companies to hire permanent workers instead of short-term seasonal help during the holidays; others may have retained temporary workers longer than planned to cover for employees who were out sick. If that results in fewer layoffs than usual, the government’s seasonal adjustment formula will interpret that continued employment as an increase.

Other numbers could also be deceptive. The unemployment rate, for example, could fall even if hiring slowed. That is because the government considers people unemployed only if they are actively searching for work, and the spike in Covid cases may have led some to suspend their job searches.

Data on average hourly earnings could also be skewed because it is based on the payroll data — people who aren’t on payrolls aren’t counted in the average at all. Low-wage workers were probably the most likely to be missing from payrolls last month, since higher-wage workers are more likely to have access to paid sick leave. That could lead to an artificial — and temporary — jump in average earnings when policymakers at the Fed are watching wage data for hints about inflation.

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Despite Labor Shortages, Workers See Few Gains in Economic Security

“Companies are doing all they can not to bake in any gains that are difficult to claw back,” Dr. Schneider said. “Workers’ labor market power is so far not yielding durable dividends.”

The changes that make work lower paying, less stable and generally more precarious date back to the 1960s and ’70s, when the labor market evolved in two key ways. First, companies began pushing more work outside the firm — relying increasingly on contractors, temps and franchisees, a practice known as “fissuring.”

Second, many businesses that continued to employ workers directly began hiring them to part-time positions, rather than full-time roles, particularly in the retail and hospitality industries.

According to the scholars Chris Tilly of the University of California, Los Angeles, and Françoise Carré of the University of Massachusetts Boston, the initial impetus for the shift to part-time work was the mass entry of women into the work force, including many who preferred part-time positions so they could be home when children returned from school.

Before long, however, employers saw an advantage in hiring part-timers and deliberately added more. “A light bulb went on one day,” Dr. Tilly said. “‘If we’re expanding part-time schedules, we don’t have to offer benefits, we can offer a lower wage rate.’”

By the late 1980s, employers had begun using scheduling software to forecast customer demand and staffed accordingly. Having a large portion of part-time workers, who could be given more hours when stores got busy and fewer hours when business slowed, helped enable this practice, known as just-in-time scheduling.

But the arrangement subjected workers to fluctuating schedules and unreliable hours, disrupting their personal lives, their sleep, even their children’s brain development.

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Inflation and Deficits Don’t Dim the Appeal of U.S. Bonds

Mr. Bernstein stipulated that while debt financing has its place, the White House also believes it has firm limits within its agenda. “The outcome of all this is going to be some mix of progressively raised revenues and investments in essential public goods with a high return financed by some borrowing.”

What would have to happen for these rock-bottom borrowing costs to rise significantly? There could be a crisis of confidence in Fed policy, a geopolitical crisis or steep increases in the Fed’s key interest rates in an attempt to kill off inflation. In a more easily imagined situation, some believe that if inflation remains near its current levels into the second half of the year, bond buyers may lose patience and reduce purchases until yields are more in tune with rising prices.

The resulting higher interest payments on debt would force budget cuts, said Marc Goldwein, the senior policy director at the Committee for a Responsible Federal Budget. Mr. Goldwein’s organization, which pushes for balanced budgets, estimated that even under this past year’s low rates, the federal government would spend over $300 billion on interest payments — more than its individual outlays on food stamps, housing, disability insurance, science, education or technology.

Last month, Brian Riedl, a senior fellow at the right-leaning Manhattan Institute, published a paper titled “How Higher Interest Rates Could Push Washington Toward a Federal Debt Crisis.” It concludes that “debt is already projected to grow to unsustainable levels even before any new proposals are enacted.”

The offsetting global and demographic trends that have been pushing rates down, Mr. Reidl writes, are an “accidental, and possibly temporary, subsidy to heavy-borrowing federal lawmakers.” Assuming that those trends will endure, he said, would be like becoming a self-satisfied football team that “managed to improve its overall win-loss record over several seasons — despite a rapidly worsening defense — because its offense kept improving enough to barely outscore its opponents.”

But at least one historical trend suggests that rates will remain tame: an overall decline in real interest rates worldwide dating back six centuries.

A paper published in 2020 by the Bank of England and written by Paul Schmelzing, a postdoctoral research associate at the Yale School of Management, found that as political and financial systems have globalized, innovated and matured, defaults among the safest borrowers — strong governments — have continuously declined. According to his paper, one ramification may be that “irrespective of particular monetary and fiscal responses, real rates could soon enter permanently negative territory,” yielding less than the rate of inflation.

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