The Labor Market Is Coming for Profit Margins — or Worse
One way or another, something’s got to give to bring inflation down. It could be companies’ income statements, workers’ purchasing power or maybe both.
The job market isn’t cooling enough to allow the Fed to slow the pace of interest rate increases.
Photographer: Olivier Douliery/AFP/Getty Images
The economic downturn hasn’t been canceled for next year, but it may have been pushed back by another month or so. That’s the latest takeaway from US payrolls data, which showed resilient hiring and persistent wage increases in September. It marks yet another round of short-term good news for workers that’s bad news for companies and the Federal Reserve.
Ultimately, it’s hard to imagine how any of this ends well for anyone. Workers continue to quit jobs for higher-paying ones at elevated rates, which led to average hourly earnings in the private sector rising 5% in September from a year ago, still well above the rate that would be consistent with the Federal Reserve’s 2% inflation target. On a three-month basis, the picture is only marginally better at an annualized pace of around 4.4%.