Weak September jobs report underscores Fed's misdiagnosis of delta variant's toll on the economy

[mahatmakanejeeves]

Economy

Weak September jobs report underscores Fed’s misdiagnosis of delta variant’s toll on the economy

Some economists and Fed watchers say the central bank underestimated delta’s threats to job growth, inflation and global supply chains going into the fall

By Rachel Siegel
Today at 1:08 p.m. EDT

The weak September jobs report offered the latest sign of the coronavirus pandemic’s hold on major sectors of the economy, conflicting with the type of recovery the Federal Reserve forecast back when the nation was entering its recent surge in cases.

A growing number of economists and experts acknowledge that the nation’s top economic policymakers underestimated the delta variant’s threat to job growth, inflation, global supply chains and people’s own comfort levels going into the fall. In recent months, the delta variant of the coronavirus tore through communities with low vaccination rates, spurred sweeping new workplace rules from the Biden administration and rattled consumer sentiment.

“I think there’s a common thread to the mistake in the Fed’s forecast, which is how the pandemic is going to impact the economy even after we got through the worst of it in 2020,” said Skanda Amarnath of Employ America, a left-leaning think tank that advocates for the Fed to let the economy run hot.

Just 10 weeks ago, Federal Reserve Chair Jerome H. Powell explained the Fed’s rosier forecast by saying the delta variant could have fewer implications for the economy if it followed the pattern of previous covid surges. Powell said in late July that with much of the country vaccinated and there being less of a likelihood for shutdowns, “we’re not experts on this but — it seems like a good, going-in estimate would be that the effects [of the delta surge] will probably be less.”

Figures released Friday by the Labor Department underscore how off-base that assessment turned out to be. The labor market in September added the lowest number of jobs this year, and more than 300,000 women over age 20 dropped out of the labor force last month, because they quit work or halted their job searches.

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By Rachel Siegel
Rachel Siegel is an economics reporter covering the Federal Reserve. She previously covered breaking news for the Post's financial section and local politics for the Post's Metro desk. Before joining the Post in June 2017, Rachel contributed to The Marshall Project and The Dallas Morning News. Twitter https://twitter.com/rachsieg

[PSPS]

1. The media-hyped "everyone is partying again" stories meant to stimulate their ad sales.

Over the past few months, many people were booking flights, cruises, parties, etc., because they were being told, either implicitly or explicitly, that "covid is over. Hurry, they're going fast! Book your rooms and flights now! We'll be back after these ads from American Airlines and Hyatt Hotels!!11!"

In fact, I have been either invited to or told about cruises, parties, etc. But I think, after some time to think about it, people are realizing that it's a mirage. All of the parties, cruises, etc., that I've been invited to have been cancelled. Either too few invitees wanted to go or the organizers themselves decided it was too risky. I certainly wasn't going to be there.

[LetMyPeopleVote]

2. I like Joe's explanation

Link to tweet