Labor Market Will Help, Not Hinder, Fed’s Inflation Fight
If you’re looking for a dose of optimism after this week’s shocking consumer price index report, jobs and wages are heading in the right direction.
Slowing down.
Photographer: Olivier Douliery/AFP
The labor market is turning out to be a new source for optimism in the Federal Reserve's fight against inflation. Worker shortages that drove up wages during the pandemic and in the economic reopening are fading. It might not amount to a labor glut, but we at least have new areas of employment stability in some industries.
While the overall labor market remains strong, it also now appears that worker pay in these industries may have overshot the fundamentals. That's leading to a growing prospect that wage growth for certain jobs is going to stagnate for a while. It's not great news for people employed in warehouses or hospitality businesses, but it offers up more hope that the elevated inflation the country has experienced over the past 18 months will normalize quickly.