January 2019

Two Labor Markets: The “Strong” & the “Weak”

“We need the concept of a natural rate of unemployment … we need to have some sense of whether unemployment is high, low or just right,” Jay Powell says (at AEA). Keep on looking Mr. Powell, you won´t find it. As the panel indicates, a “low” unemployment rate can be a feature of both a “strong” and a “weak” labor market. In all other dimensions, this labor market is relatively weak. Employment has grown much less. Wage growth has been much more subdued. Meanwhile, on average, inflation is similar (1.6% yoy now versus 1.7% then). The participation rate well reflects… Read More