On the one hand, wages are surging and measures of inflation are on the rise, suggesting the need to increase interest rates sooner rather than later. On the other hand, there are still millions of unemployed Americans with millions more staying out of the labor force and the job market is still recovering from the pandemic, suggesting the need to keep interest rates low to help increase employment.
The combination puts the Federal Reserve in a difficult spot. As shown in the chart below, during the last two economic cycles when the job market was in a similar position, broad price pressures were weaker. That meant the Fed didn't need to make the trade-off between helping employment and fighting inflation.Much as the Fed has been balancing two sides of the inflation-job market equation, there has also been the development of two teams fighting on either side.
The chart below shows two series. The first is GDP per hour worked, or how much value a worker can create in an hour . The other measure shows labor costs per unit of output, that is how much it costs a business to pay a worker to produce one unit of real output. This isn't to say higher wages haven't played some role in higher prices overall, but since the COVID recovery began, high commodity prices, supply chain disruptions,strong consumer demand, and the shift in spending from services to goods have all played bigger roles than labor markets.
pearkes Thank you Amazon for that thought.
pearkes 观点|美联储不必在控制通胀和让就业市场变得更强劲之间做出选择。作者pearkes。
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