«And at this stage of the game, with inflation BELOW target and plenty of
slack in labor markets, that could very well be a mistake.
A 14 - year low on jobless claims reinforced expectations that
slack in the labor market was being reduced.
Details of the employment report were upbeat, with most of the measures Fed Chair Janet Yellen tracks to gauge the amount of
slack in the labor market showing further improvement.
If the economy were to grow at the pace I discussed earlier, this would likely translate into sufficient job gains to continue to remove any remaining
slack in the labor market — which, by my assessment, is already operating quite close to a level that is consistent with what is achievable on a sustainable basis.
We've also still got
slack in the labor market — put all of these factors together and we're a few years behind the US on rates.»
With an energy - related rebound in inflation fading, signs of improving economic conditions need to be put into perspective, as the output gap across the region as a whole remains large, and so does
the slack in its labor market.
With an energy - related rebound in inflation fading, signs of improving economic conditions need to be put into perspective — despite the strong performance of Germany, the bloc's largest economy — as the output gap across the region as a whole remains large, and so does
the slack in its labor market.
If growth in America is accelerating, which it seems to be, and any remaining
slack in the labor markets is disappearing — and wages start going up, as do commodity prices — then it is not an unreasonable possibility that inflation could go higher than people might expect.
Economist Jessica Hinds at Capital Economics said there is «still plenty of
slack in the labor market» with high jobless rates of 16.1 percent in Spain, 10.9 percent in Italy and 8.9 percent in France.
The pace of wage growth has been restrained amid excess
slack in the labor markets, but the labor force participation rate has recently stabilized and labor markets are currently nearing full employment, supporting core inflation.
Not exact matches
The four - week moving average of continuing claims fell 750, to 1.90 million, the lowest level since Jan. 12, 1974, suggesting a continued decline
in labor market slack.
Whatever the reason for the elevated
slack in the U.S.
labor market, one obvious solution would be faster economic, productivity, and wage growth.
If this attribution were correct, there would be little
labor market slack left
in the US economy, and the standard unemployment rate (minus the best - guess nonaccelerating inflation rate of unemployment [NAIRU]-RRB- would be a nearly sufficient target for that
slack.
At the same time, Janet Yellen has said that she's willing to tolerate a period of time
in which inflation is above the Fed's 2 % goal, if that stance can help guarantee that
slack is eliminated from the
labor market and full employment is achieved.
A key measure of
labor market slack - the number of job seekers for every open position - hit its lowest level since 2007
in December.
She said: «But it is my judgment that the lower level of the unemployment rate today probably does not fully capture the extent of
slack remaining
in the
labor market —
in other words, how far away we are from a full - employment economy.»
Other factors that have been suggested include continued
labor -
market slack; lagging educational attainment relative to other countries; and a broad decline
in better - paying jobs and consequent shift toward job growth
in low - wage industries.
But even 150,000 job gains per month would be consistent with gradually using up any remaining
slack present
in the U.S.
labor market.
This potential relaxation of fiscal constraints is significant, particularly when you consider that the economy, specifically the
labor market, has less
slack than at any point
in the post-crisis period.
Our analysis leverages data from the U.S. Census and Bureau of
Labor Statistics to determine how much new housing a metro can build, the amount of
slack in the housing
market and the impact of an influx of high - wage workers.
The message was driven home further by Fed Chair Janet Yellen, who
in a congressional hearing
in early November asserted that the downside risks to the US economy from global developments had diminished since September and that there has been a significant fall
in labor market slack.
A broader measure of
labor market slack, the number of people who are
in part - time employment but would like a full - time position (the U-6 underemployment rate), has also been drifting lower (to 10.3 %
in August).
But the prescription offered by the Taylor rule changes significantly if one instead assumes, as I do, that appreciable
slack still remains
in the
labor market, and that the economy's equilibrium real federal funds rate — that is, the real rate consistent with the economy achieving maximum employment and price stability over the medium term — is currently quite low by historical standards.
Its elevated level suggests that
slack remains
in the
labor market that could prevent wages from breaking out.
With the unemployment rate down to just 4.1 %, any increase
in wages as a share of GDP should be expected to diminish profit margins from the extremes they've enjoyed as a result of
labor market slack in this cycle.
We analyzed data from the U.S. Census and Bureau of
Labor Statistics to determine how much new housing a metro can build, the amount of
slack in the housing
market and the impact of an influx of high - wage workers.