The Week in Business: Time to Slow the Economic Stimulus
What’s Up? (Oct. 31-Nov. 6)
A First Step in Tapering
The Federal Reserve announced plans on Wednesday to slow its bond-buying program, a stimulus measure it introduced early in the pandemic. The central bank will reduce its monthly purchases of $120 billion in Treasury bonds and mortgage-backed securities by $15 billion a month, starting this month. The Fed’s policy committee did not give any indication it would raise interest rates anytime soon, despite persistently high inflation. But investors expect it will begin to do so midway through 2022.
A flat labor participation rate could make the Fed’s decision about whether to raise interest rates even more complicated. New data released on Friday showed that the American economy added 531,000 jobs in October, a rebound from the previous month. But the measure of how many people are working or actively looking for work is still two percentage points lower than it was before the pandemic. Factors that could be keeping people out of the work force — and preventing the Fed from reaching its goal of full employment as quickly as it expected — include continued child care struggles, early retirements and a general rethinking of life spurred by the pandemic. Aside from the labor participation rate, there were also signs in Friday’s report that employment is gradually returning to normal: The proportion of employed people who worked remotely at some point last month dropped.
A Mandate to Mandate
The Labor Department’s Occupational Safety and Health Administration published a rule on Thursday requiring businesses with 100 or more employees to ensure that all their workers are fully vaccinated by Jan. 4 or face weekly testing. President Biden announced the plan in September, but many businesses held off on setting requirements for their employees as they awaited further guidance. Companies that have already set mandates have seen large portions of their work force get the vaccine. They include Tyson Foods, which said that more than 96 percent of workers had their shots, compared with less than 50 percent before it announced its mandate in August, and United Airlines, which said in September that more than 99 percent of its work force was vaccinated. The new rule is expected to cover 84 million workers, including 31 million who are currently unvaccinated. A separate new emergency regulation will require vaccinations for 17 million workers at health care facilities receiving Medicare or Medicaid funding, with no option to instead undergo weekly testing. Large employers must also require unvaccinated workers to wear masks starting on Dec. 5.
What’s Next? (Nov. 7-13)
The Department of Labor will report on Wednesday how much prices rose in October. The Consumer Price Index, an important measure of inflation, jumped more than expected in September. The higher prices are driven in part by supply chain shortages and rising labor costs. Most economists and policymakers had expected just a temporary bump in prices because of the pandemic. But signals from the bond market suggest that higher prices could stick around for a while. Wages appear to be keeping pace with price increases, but it’s not yet clear whether that will benefit workers as inflation eases, or create the conditions for more inflation.
Shots for Young Children
Children ages 5 to 11 began getting coronavirus vaccine shots for the first time on Wednesday, shortly after the Centers for Disease Control and Prevention endorsed the Pfizer-BioNTech vaccine for the roughly 29 million children in that age group. President Biden said that the vaccination program should be “fully up and running” by the end of this week. That news came as a relief to more than just parents. Employers may also benefit from vaccinating children: Uncertainty over child care and school closings — as well as parents’ fear of contracting the virus and exposing their unvaccinated children — have kept some parents from returning to work.
More From the Facebook Whistle-Blower
On Monday, the former Facebook product manager turned whistle-blower Frances Haugen will appear before the European Parliament. Ms. Haugen has already testified before the U.S. Senate, making a case for more oversight of the social media giant, which recently changed its name to Meta. She said that the company had purposefully hidden research about the negative impacts of its products and gave priority to keeping people engaged with its content over their well-being. (Meta has said that its research was taken out of context.) Her statements in Congress intensified calls in Europe for new regulations aimed at the Silicon Valley giants, including tougher rules for how internet companies police their platform and stricter competition rules.
Facebook faces a new antitrust lawsuit that accuses the company of copying an app named Phhhoto and then putting it out of business. Google’s parent, Alphabet, is starting a new company dedicated to drug discovery. Daylight saving time ended in the United States this morning. And a ban on international travelers will lift on Monday.