The Employment Report: Yellen´s last

Economists call accelerating wages ‘best news’ in January jobs report.

However, wage growth for 80% of workers (production & non-supervisory) has been stuck for quite some time.

The panel shows what a non-inflationary boom looks like. Low inflation and falling/low unemployment in both cases. However, a real boom sees a robust growth in hourly and weekly earnings.

During Yellen´s tenure, the overall labor force participation rate remained flat as a pancake after dropping significantly following the Great Recession. Meanwhile, prime age worker participation showed a slight increase halfway through her mandate but has flattened again.

There was nothing special about the fall in the unemployment rate during Yellen´s tenure. It was the “natural” sequence to the fall observed during Bernanke´s second term. It is mostly driven by what´s happening to the Wage/NGDP ratio. Note that when that ratio “flattens”, the drop in unemployment “takes a break”.

Bottom Line: For all the excitement that has transpired in “farewell pieces” on Yellen, her term can be likened to Bernanke´s third, that would also have maintained the economy stuck in a “long depression”.


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