Stocks similarly sold off when Wall Street first heard about the Delta variant, but it soon rebounded and surged to new records as vaccine availability spread and health officials learned how to better manage the pandemic.
In his prepared testimony, Powell noted the economy took a body blow in the summer as the Delta variant spread across the globe. Many Americans were afraid to travel, shop, eat at restaurants and return to the office. That kept caregivers at home, exacerbating the labor shortage and supply chain crisis that have held back the US economy.
The economy has ebbed and flowed with rising and falling infections, and Omicron threatens to undo much of the economic goodwill America has generated throughout the autumn months.
“Greater concerns about the virus could reduce people’s willingness to work in person, which would slow progress in the labor market and intensify supply-chain disruptions,” Powell wrote in his testimony.
Inflation could be here to stay for a bit longer, Powell said. It’s a bit of a Catch-22: The labor shortage had been sending wages (and prices) higher. But with job growth accelerating in recent months, employers are finding fewer applicants for their available jobs — and they have to raise pay to attract new workers.