The long reach of long Covid

From: POLITICO's Morning Money - Tuesday Aug 09,2022 12:01 pm
Delivered daily by 8 a.m., Morning Money examines the latest news in finance politics and policy.
Aug 09, 2022 View in browser
 
POLITICO Morning Money

By Sam Sutton , Ben White and Aubree Eliza Weaver

Editor’s note: Morning Money is a free version of POLITICO Pro Financial Services morning newsletter, which is delivered to our s each morning at 5:15 a.m. The POLITICO Pro platform combines the news you need with tools you can use to take action on the day’s biggest stories.  Act on the news with POLITICO Pro .

It was fairly easy to measure Covid-19’s effect on the U.S. labor force in the early days of the pandemic. Offices closed, unemployment soared and service economy businesses – particularly those in leisure, hospitality and travel — shut down or limped along with fewer workers and limited operations.

It’s harder now.

Most state and local restrictions have been lifted. Unemployment is near historic lows and the labor force remains smaller than it was prior to the March 2020 shutdown. And while the latest data on job openings suggests the market has started to cool, there are still millions more openings in the U.S. than at any point in the decade prior to Covid-19’s arrival.

That combination contributed to everything from rising household prices and understaffed restaurants to crowded airports and customer service delays. It has also left many economists wondering if they have the tools to account for Covid-19’s lingering impact on labor markets and workers.

A recent Kaiser Family Foundation report says that anywhere from 10 million to 35 million working-age adults — as many as a third of all infections — are experiencing long Covid, a hazily defined ailment with symptoms that can include “brain fog,” shortness of breath, heart palpitations and neurological changes.

Those symptoms can last anywhere from a few weeks to more than a year. Sen. Tim Kaine (D-Va.) told POLITICO’s Alice Miranda Ollstein that he has felt “ as if every nerve ending in my body has had five cups of coffee ” since his initial infection subsided in early 2020.

The spectrum, severity and duration of symptoms — coupled with limited case data and inconsistent paid sick leave policies – have made it impossible for economists to establish the long-haul disease’s material effects on the labor force, RAND Corp. economist Kathryn Anne Edwards said during a live Twitter Spaces event hosted by POLITICO on Friday.

“We're not great at counting who has long COVID because we don't have the means of doing so,” she said, adding that’s made it impossible to match how cases “would interact with the labor market because so many aspects of our labor markets differ so greatly in how they can accommodate a disability on the job.”

That hasn’t stopped researchers from trying. A survey of long Covid patients published in The Lancet found that more than two-thirds of those surveyed required a reduced work schedule or had stopped working after becoming infected.

The U.S. is still clocking around 120,000 new infections each day. If even a fraction of those become the type of long Covid cases that remove people from the labor market, its effect on workforce participation would be akin to that of a leaky stopper on a full bathtub.

For now, estimates put the severity of the leakage to be anywhere from 500,000 to 2 million people, according to Edwards. In January, Brookings Institution nonresident senior fellow Katie Bach attributed about 15 percent of job openings to long Covid — which translated to roughly 1.6 million positions at the time.

Until the data improves, it’s unlikely the U.S. will grasp the pandemic’s bearing on labor markets and inflation.

“We don't understand it,” Edwards said. “We certainly aren't making policy around it.”

IT’S TUESDAY — Have a tip, story idea or other feedback for any of us? Hit us up at kdavidson@politico.com , ssutton@politico.com or aweaver@politico.com .

 

STEP INSIDE THE WEST WING: What's really happening in West Wing offices? Find out who's up, who's down, and who really has the president’s ear in our West Wing Playbook newsletter, the insider's guide to the Biden White House and Cabinet. For buzzy nuggets and details that you won't find anywhere else, subscribe today .

 
 
Driving the Day

President Joe Biden will sign the CHIPS and Science Act later today. Second-quarter productivity and labor cost reports out Tuesday.

TOO HOT TO HANDLE — Anyone searching for clarity on just what the U.S. economy is doing based on last week’s jobs numbers is still searching. The figure for July shocked Wall Street, coming in at a blockbuster 528,000 and blowing away expectations for a cooling to around 250,000. President Joe Biden himself recently predicted such a cooling, describing it as a good thing to help transition to more “stable steady growth.” The White House even prepped reporters for a potentially soft number on Friday.

Then BOOM. The huge beat. Ordinarily, big job gains are fabulous and what everyone wants to see. Everyone, that is, except Republicans pushing the (incorrect for now) notion that we are already in a “Biden recession” given we’ve had back-to-back quarters of shrinking gross domestic product.

We will get important fresh data on inflation on Wednesday morning with the latest reading on the Consumer Price Index . CPI is not the Fed’s favorite inflation gauge. Still, it’s the one that gets the most pixels and TV time. CPI inflation jumped on a monthly basis in June. And the annualized rate climbed to a scary 9.1 percent, another four-decade high. Economists almost uniformly think the number for July will tick down a bit given the decline in gas prices and other commodities.

But it’s still going to be really bad and well above what the Fed wants to see. And if CPI shocks the world and returns a RISE again in July, well, that would be quite bad and freak everyone out. Wall Street will start talking about even bigger rate hikes and possibly an emergency extra Fed meeting in August. – Ben White

FADING — Bloomberg’s Alexandre Tanzi: “ Consumer expectations for US inflation over the coming years declined sharply in the latest survey by the Federal Reserve Bank of New York , a finding that may ease the Fed’s concern about ever-rising prices getting baked-in to household behavior. Expectations for US inflation three years ahead fell to 3.2% in July, from 3.6% the previous month, according to the New York Fed’s Survey of Consumer Expectations.”

DEMS WEIGH IN ON COMMUNITY REINVESTMENT ACT — House Financial Services Chair Maxine Waters (D-Calif.) and 75 other House Democrats sent a letter to bank regulators on Monday urging them to adopt changes to the Community Reinvestment Act that would “put an end to modern-day redlining by, in part, ensuring … CRA exams take into account bank activities that impact communities of color as well as low-and-moderate income communities,” the lawmakers wrote .

THE NEVERENDING STORY —  Reuters: “Elon Musk said that if Twitter Inc. could provide its method of sampling 100 accounts and how it confirmed that the accounts are real, his $44 billion deal to buy the company should proceed on its original terms . ‘However, if it turns out that their SEC filings are materially false, then it should not,’ Musk tweeted early on Saturday.”

Economy

HIGH INFLATION, LOW INCOME — From NYT’s Jeanna Smialek and Ben Casselman: “Higher-income households built up savings and wealth during the early stages of the pandemic as they stayed at home and their stocks, houses and other assets rose in value. Between those stockpiles and solid wage growth, many have been able to keep spending even as costs climb. But data and anecdotes suggest that lower-income households, despite the resilient job market, are struggling more profoundly with inflation .”

INVESTORS ARE AWARE OF THE DYNAMIC — From WSJ’s Matt Grossman: “The looming prospect of a recession has Wall Street shifting its bets on which debts Americans will make good on and which could lapse … Those who invest across many types of Americans’ $16 trillion of household debt—such as mortgages, car loans and credit-card lines—are confronting a question that demands imagination as well as analysis: Which payments will families make first if hard times force hard choices over which bills to cover ?”

A SPEARED WHALE — WSJ’s Megumi Fujikawa: “Japanese technology investor SoftBank Group Corp. reported a record quarterly loss of more than $23 billion after an investment spree that Chief Executive Masayoshi Son described as delirious turned sour. The April-June loss, triggered by a global selloff in technology shares, was about 1½ times the previous record set just three months earlier in the January-March quarter . Mr. Son said job cuts and asset sales were planned as part of a retrenchment.”

RETURN OF THE MEME STOCK — Bloomberg’s Bailey Lipschultz and Elena Popina: “Retail traders who lurk in forums like Reddit’s WallStreetBets are back to betting against Wall Street pros and the Federal Reserve as rallies for meme stocks like Bed Bath & Beyond Inc. and AMC Entertainment Holdings Inc. show shades of last year’s mania.”

LEVERAGE — WSJ’s Akane Otani: “[Michael Wilson, chief U.S. equity strategist and chief investment officer for Morgan Stanley, is] in agreement with much of Wall Street that inflation has likely peaked for now. Where he differs from some is what he thinks that means for the markets. Mr. Wilson believes falling inflation will actually hurt profits in the coming quarters because of two words: operating leverage .”  

Crypto

THE PAXTON PROTOCOL — From POLITICO’s Eric Geller: “The Treasury Department on Monday sanctioned Tornado Cash , one of the largest so-called cryptocurrency mixers, for helping hackers in North Korea and elsewhere launder stolen money.”

Coin Center’s Jerry Brito and Peter Van Valkenburgh have labeled the effort an overreach : “If it was the Treasury Department’s intent to sanction some group of persons who actively maintain or promote Tornado.cash, that would be one thing. This SDN entry, however, merely identifies a URL and a series of Ethereum contract addresses … It is a ban on a technology and not a sanction against a person.”

LOSSES ON LOSSES — Bloomberg’s Yueqi Yang: “Galaxy Digital Holdings Ltd., the crypto financial services firm founded by billionaire Michael Novogratz, said its second-quarter loss more than doubled against a backdrop of digital asset price declines.”

Jobs Report

Carlyle Group CEO Kewsong Lee will step down at the end of this year , WSJ’s Miriam Gottfried reported on Monday.

Morgan Stanley has tapped John Ryan to become president of its US bank operating subsidiaries , according to Bloomberg’s Sridhar Natarajan.

 

INTRODUCING POWER SWITCH: The energy landscape is profoundly transforming. Power Switch is a daily newsletter that unlocks the most important stories driving the energy sector and the political forces shaping critical decisions about your energy future, from production to storage, distribution to consumption. Don’t miss out on Power Switch, your guide to the politics of energy transformation in America and around the world. SUBSCRIBE TODAY .

 
 
Fly Around

After the invasion, the United States and other countries banned high-tech exports to Russia to try to cripple its defense industry and tech companies announced that they had halted all exports to Russia. Yet the reporting team found that the flow of Western brand-name computer parts to Russia hasn’t stopped , with thousands of shipments since the invasion of Ukraine. — Reuters’s David Gauthier-Villars, Steve Stecklow, Maurice Tamman, Stephen Grey and Andrew Macaskill

Latin American companies could replace at least some of the Chinese companies' initial public offerings (IPOs) that have disappeared from Western markets this year, a senior Nasdaq executive said. — Reuters’s Tatiana Bautzer

 

Follow us on Twitter

Mark McQuillian @mcqdc

Kate Davidson @KateDAvidson

Aubree Eliza Weaver @aubreeeweaver

Ben White @morningmoneyben

Victoria Guida @vtg2

Katy O'Donnell @katyodonnell_

Zachary Warmbrodt @Zachary

Sam Sutton @samjsutton

 

Follow us

Follow us on Facebook Follow us on Twitter Follow us on Instagram Listen on Apple Podcast
 

To change your alert settings, please log in at https://www.politico.com/_login?base=https%3A%2F%2Fwww.politico.com/settings

This email was sent to by: POLITICO, LLC 1000 Wilson Blvd. Arlington, VA, 22209, USA

Please click here and follow the steps to .

More emails from POLITICO's Morning Money

Aug 08,2022 12:01 pm - Monday

Globetrotting and oil capping

Aug 05,2022 12:01 pm - Friday

Jobs day: No shocks, please

Aug 04,2022 12:01 pm - Thursday

Running up the score

Aug 03,2022 12:01 pm - Wednesday

Choosing crypto's new boss

Aug 02,2022 12:01 pm - Tuesday

What’s in a bill name?