Mar 15, 2017

The workers Janet Yellen is leaving behind

Andrew Harnik/AP

It's all but certain the Janet Yellen and the FOMC will raise interest rates this afternoon, and the decision will tell us some important information about how Fed officials see the economy and the U.S. labor force.

Why this matters: Economists think severe recessions are particularly painful because the inflict long-term joblessness on workers, a state that leads to erosion of skills employers demand. It's a vicious cycle that creates a class of degraded workers for whom indefinite joblessness is a common fate. Rising interest rates now may create an economy that leaves those workers behind.

The Fed has kept monetary policy loose, hoping that demand would grow high enough that employers would take a chance on these workers and even invest in training that could get them up to speed. And it's worked:

Expand chart
Data: Bureau of Labor Statistics, Federal Reserve Bank of St. Louis; Chart: Andrew Witherspoon / Axios

A smaller share of those out of the labor force are finding jobs these days however, even with the Fed's policy of easy money. This, plus rising measures of wage growth, has convinced many observers that even though the labor force participation rate among workers 25-54 remains low, many of these folks are probably lost causes to the effects of the Great Recession. The Fed, by embarking on a course of rate hikes, is implicitly endorsing this view.

A good call?: One side says no — what's the point of raising rates when the labor market is improving but inflation is not yet a problem? The other says yes — if the Fed waits to see inflation, it will be too late, possibly forcing the Fed to trigger a recession as it accelerates its plans to raise rates.

Go deeper

Coronavirus dashboard

Illustration: Aïda Amer/Axios

  1. Global: Total confirmed cases as of 3 a.m. ET: 5,410,228 — Total deaths: 345,105 — Total recoveries — 2,169,005Map.
  2. U.S.: Total confirmed cases as of 3 a.m. ET: 1,643,499 — Total deaths: 97,722 — Total recoveries: 366,736 — Total tested: 14,163,915Map.
  3. World: White House announces travel restrictions on Brazil, coronavirus hotspot in Southern Hemisphere Over 100 coronavirus cases in Germany tied to single day of church services — Boris Johnson backs top aide amid reports that he broke U.K. lockdown while exhibiting symptoms.
  4. Public health: Officials are urging Americans to wear masks headed into Memorial Day weekend Report finds "little evidence" coronavirus under control in most statesHurricanes, wildfires, the flu could strain COVID-19 response
  5. Economy: White House economic adviser Kevin Hassett says it's possible the unemployment rate could still be in double digits by November's election — Public employees brace for layoffs.
  6. Federal government: Trump attacks a Columbia University study that suggests earlier lockdown could have saved 36,000 American lives.
  7. What should I do? Hydroxychloroquine questions answeredTraveling, asthma, dishes, disinfectants and being contagiousMasks, lending books and self-isolatingExercise, laundry, what counts as soap — Pets, moving and personal healthAnswers about the virus from Axios expertsWhat to know about social distancingHow to minimize your risk.
  8. Other resources: CDC on how to avoid the virus, what to do if you get it, the right mask to wear.

Subscribe to Mike Allen's Axios AM to follow our coronavirus coverage each morning from your inbox.

Updated 2 hours ago - Politics & Policy

U.S. coronavirus updates

Data: The Center for Systems Science and Engineering at Johns Hopkins; Map: Andrew Witherspoon/Axios. This graphic includes "probable deaths" that New York City began reporting on April 14.

The CDC is warning of potentially "aggressive rodent behavior" amid a rise in reports of rat activity in several areas, as the animals search further for food while Americans stay home more during the coronavirus pandemic.

By the numbers: More than 97,700 people have died from COVID-19 and over 1.6 million have tested positive in the U.S. Over 366,700 Americans have recovered and more than 14.1 million tests have been conducted.

World coronavirus updates

Data: The Center for Systems Science and Engineering at Johns Hopkins; Map: Axios Visuals

Japan's economy minister outlined plans on Monday to end the nationwide state of emergency as the number of new novel coronavirus cases continues to decline to fewer than 50 a day, per Bloomberg. Japan has reported 16,550 cases and 820 deaths.

By the numbers: Over 5.4 million people have tested positive for the virus as of Monday, and more than 2.1 million have recovered. The U.S. has reported the most cases in the world (over 1.6 million from 13.7 million tests). The U.K. is reporting over 36,800 deaths from the coronavirus — the most fatalities outside the U.S.