This month we have finally reached the previous highs in employment. The employment shortfall gap has been filled. This is six years after the previous peak and five years after the trough of the recession. So what? Should we be excited?
The labor market still shows significant underemployment and declining labor participation. Many have left the labor force, so we are not getting any clear signals from the labor market that we are having a strong economy. The labor slack suggests that there is limited potential increases in wages which can push inflation or wages higher.
The continued focus by the market on labor statistics seems misplaced and irrelevant. The focus should be on credit, consumer spending, and confidence surveys. Labor data just contribute noise.
The labor market still shows significant underemployment and declining labor participation. Many have left the labor force, so we are not getting any clear signals from the labor market that we are having a strong economy. The labor slack suggests that there is limited potential increases in wages which can push inflation or wages higher.
The continued focus by the market on labor statistics seems misplaced and irrelevant. The focus should be on credit, consumer spending, and confidence surveys. Labor data just contribute noise.
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