The USA leads the world with 70,130,650 infections and 864,182 deaths. The next country on the list is India with 38,903,731 infections and 488,884 deaths. How is it possible that a country with 4 times the population of the United States has half as many infections and deaths from the pandemic? The recent spike in the number of infections is causing large numbers of workers to call in sick for work. This is causing a slowdown in production and delivery of goods and services. Businesses have had to increase wages in the past year to comply with increased minimum wage requirements and to retain workers. To make up for lower anticipated profits, companies have raised prices over and above what is necessary to cover the wage increases. Now, workers want even higher wages to cover the increased cost of everything.
The Fed plans on increasing interest rates this year to reduce inflation. This plus the pandemic, the economic problems in China, and the Russian invasion of Ukraine is causing the stock market to drop faster than anyone anticipated. The Fed Funds rate has been at .25% since the pandemic started two years ago. This means that money will cost more to borrow once they start raising the rate. By the end of 2022, the rate is projected to reach 1.00%. This is only an estimate, it could be slightly higher or lower. The Nasdaq has reacted by dropping 11% and the DOW is down over 4% in the first 3 weeks of January. My investments, which currently have 41% in stocks, are down 4%. That may not sound like much, but it is enough to cover the average price of a new car in 2022.
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