Investors face reckoning as stock market has worst week since beginning of pandemic

But if it’s too nonchalant about the threat, higher inflation could become an enduring feature of the economy, eating away at wage gains and depressing quality of life.“Just how successfully the Fed navigates these crosscurrents is the wild card in the outlook,” Bob Schwartz, an economist at Oxford Economics, wrote in a note late Friday.Domestic markets during the pandemic have seen troubling dynamics before, but have largely looked past them as the Fed kept interest rates low and consumer spending remained robust.But with covid-19 infections due to the omicron variant surging and a tight labor market, traders this week appeared to adjust their long-term vision of the financial landscape.The fallout of the week’s losses could have broad consequences, striking 401(k) and retirement accounts and causing borrowers to peel back expectations for the year after a prodigious rise in the market over the past year. The Dow gained 18.7 percent in 2021, and the S&P did even better at 26.9 percent.American consumers, bolstered by a booming stock market and high savings rates, have so far continued to spend despite rising prices and disruptions from the fast-spreading omicron variant.