The HUGE Impact of Covid on Our Economy

John Mauldin had an excellent article Labor Day weekend with 3 reasons why the Job Market is potentially forever changed by Covid.
· Let’s estimate, I think conservatively, that long-lasting COVIDs symptoms afflicts 10 million working-age Americans over the next year or two. Some will be fully disabled, others mildly annoyed, most somewhere in between, but all will be rendered less productive.
· The number of people homeschooling their children has literally doubled in the last year, from 2.5 million to 5 million and very few people who homeschool can also work.
· The number of adults over 65 that are in the workforce has dropped by 1 million people.

Peter Boockvar said, “The belief that we’re going back to a pre-Covid labor force is just not realistic.” If Peter is correct here is what this may cause—
· A higher unemployment rate and the Fed wants this number below 4% and they may NEVER get it there now. Which could mean short-term interest rates remain near 0% and quite possibly QE continued with long-term Treasuries and mortgage bonds.
· We may see higher inflation as some sectors of the workforce have to substantially increase wages to get people to work.
· With fewer people working this also MUST MEAN LOWER GDP GROWTH. Why? We need more people working to increase GDP growth.
This could all lead to Stagflation from the 70’s and early 80’s.