Interest Rates, Federal Reserve, and Unemployment
Tough Job Market
Skill Mismatch
Permanent Changes
The Incentives of Unemployment
Puerto Rico

We are almost through February and (knocking on wood) the US COVID-19 situation is improving daily. The B117 and other variants haven’t yet made a big impact. Possibly they will, but as time passes more people are getting at least partial protection through vaccines. The “race” I’ve described seems to be going the way we hoped.

In the US, hospitalizations for those age 85 and older dropped 81% from January to February, according to Bloomberg. This chart below summarizes data from 10 states.

Source: Bloomberg

Another case surge, variant-driven or otherwise, shouldn’t be as deadly since so many vulnerable and older people have been vaccinated. The vaccines appear extremely effective at minimizing severity even when they don’t stop infection. And the fact that every age group—including those who haven’t yet been offered vaccines—is seeing lower hospitalizations is very encouraging.

If this continues, and we all hope it does, it means we can start looking ahead to the other side of all this. By no means have we reached the other side. It is not yet time to relax. Nevertheless, it looks like we can, as President Biden has said, “approach normalcy” by year-end.

But that raises a question: What normalcy will it be? I don’t expect to simply go back to the way things were. The economy as it was structured in December 2019 is gone forever. The world is different now. The economy will be different, too.

We’ll see this in myriad ways but in this letter I’ll focus on just one: jobs. That is the key way in which most people participate in the economy. How they do it matters. And, as you’ll see, many will do it in new and different forms.