2022 Employment Trends: How are Inflation and Labor Markets Related?
A bird in the hand is better than two in the bush. Today’s labor market has turned this proverb around and it has Jay Powell’s attention.
The financial markets have been in turmoil as the Federal Reserve has struggled to control inflation. The US central bank has acknowledged their initial error of judging inflation as “transitory” largely due to pandemic induced supply chain disruptions. While many of these issues are resolving, core inflation measurements have remained persistently elevated.
A major concern for policymakers has been the imbalance between labor supply and demand. But how are employment and inflation related? This month’s update will focus on a few of the employment trends and their contributions to the Fed’s challenge of containing inflation.
