Wages

The July 2023 labor market data continues to confirm the story we’ve been telling for months: while slowing down, the labor market remains strong, with high levels of employment amidst a disinflationary environment. The headline unemployment number fell to 3.5% from 3.6%, consistent with our preview, and

The data from the June labor market shows continued strength in the labor market, with strong employment and wage growth. The headline unemployment number fell to 3.6% from 3.7% and the establishment survey showed a solid 209,000 jobs added in June, consistent with our preview. While below

One argument that the labor market is to blame for high inflation has been the significant rise in unit labor costs during the post-pandemic recovery. The most recent example comes from the ECB:

Throughout the pandemic recovery, high inflation has been attributed to tight labor markets and high wage growth. Fed officials have, for months, maintained that the labor market needs to soften in order to bring down inflation. Commentators have pointed to high wage growth as a source of cost-push inflation: My

The data from the May labor market shows continued renormalization of the labor market, with strong employment, continued slowing of wage growth, and reduced churn.

Welcome to our State Space series. Here you will find how we’re thinking about the pathways and scenarios that could take us to critical economic states. We will never settle for "it's too unlikely." We try to reason backwards from the most important (tail-risk) scenarios,

We are now at the point where many labor market utilization numbers—unemployment, employment, participation, full-time employment—are beyond pre-pandemic levels. We shouldn’t treat 2019 as a goal to return to; new highs are both possible and desirable.