Why better US jobs numbers haven't driven spending or inflation
You are missing trading opportunities:
- Free trading apps
- Over 8,000 signals for copying
- Economic news for exploring financial markets
Registration
Log in
You agree to website policy and terms of use
If you do not have an account, please register
PCE report a setback for Fed hawks
The idea at the core of the Fed, and most economists' models, is that more jobs will lead to increased spending and rising inflation.
It's inarguably true.
At least at some level it's inarguable true and there's the rub. How perfectly the relationship works depends on the quality of the jobs and the ability of workers to negotiate. The US is very close to full employment but workers are tapped out. The threat of offshoring and automation is the negotiation trump card.
At the same time, it's been credit growth, not income growth, that's spurred a large portion of the inflation over the past quarter century. It's maxed out and consumers are more inclined to save, especially with the economic horizon looking so mediocre.
That's why today's PCE report failed to show rising inflation or spending.
source