LAST MONTH Jerome Powell, the chairman of the Federal Reserve, identified the most uncomfortable trade-off in economics. “Today’s labour market”, he said at a press conference, is “tight to an unhealthy level”. In most places and at most times a fall in unemployment, or a rise in the number of people in work, is welcome. But labour markets can become too strained—creating worker shortages that stop production and cause wages to spiral, which can feed in to overall inflation.
In fact it is 3.6%. And America, by many standards, is a laggard. A rise in the number of Americans who have decided they do not want to work at all, and who therefore do not count as unemployed, means that the share of 15- to 64-year-olds with a job is slightly below its level at the end of 2019 . In one-third of rich countries, however, this share is at an all-time high.
Government policy has also boosted jobs. In 2020 countries including Australia, Britain, France and Germany launched or expanded job-protection or furlough schemes. At the peak over a fifth of European workers remained technically employed even as they sat at home. When lockdowns lifted, they could quickly return to their roles, rather than having to search and apply for work, which takes time and thus keeps unemployment elevated.
Bad employers are having a tough time. The share of Americans worried about poor job security is near a historical low. In Britain the share of full-time workers on a “zero-hours contract”, where there are no guaranteed hours, soared after the financial crisis but is now falling. Many of the gig-economy firms that grew rapidly in the early 2010s by relying on an army of underemployed workers are now struggling to find staff.
On average, however, labour markets across the rich world are clearly getting tighter. America’s is plainly overheating. In February the average wage was 5.8% higher than a year earlier, according to the Atlanta Fed, with the lowest-paid seeing bigger raises . Goldman Sachs, a bank, produces a wage tracker that corrects for various pandemic-related distortions. It is more than 5% higher than a year ago, the fastest rate of increase since the data began in the 1980s.
Productivity growth of 2% a year is not unachievable, but it would be a lot stronger than it was before the pandemic. Although productivity growth does seem faster than normal, our analysis of data from OECD countries suggests that it falls short of 2%. It may yet rise as companies reap the gains from their large investments in remote-working technologies and digitisation. Hopes of higher productivity, however, must be weighed against fears of still-higher wage growth.
Fake news!! Just not realistic based on what I have seen! Get out into every nook and cranny of the world economy before making such nonsensical prognostications! War in Ukraine aids no one, not even the Russians. Stupidity governs at least for the moment! You are sucked in!
𝗔𝗻𝗱 𝗙𝗼𝗿 𝘁𝗵𝗼𝘀𝗲 𝗼𝗳 𝘆𝗼𝘂 𝗶𝗻𝘁𝗲𝗿𝗲𝘀𝘁𝗲𝗱 𝗶𝗻 𝗠𝗮𝗸𝗶𝗻𝗴 𝟲,𝟰𝟬𝟬𝗨𝗦𝗗 𝘄𝗲𝗲𝗸𝗹𝘆 𝘄𝗶𝘁𝗵 𝗶𝗻𝘃𝗲𝘀𝘁 𝗼𝗳 𝗷𝘂𝘀𝘁 𝟭𝟬𝟬𝟬𝗨𝗦𝗗 , 𝗝𝘂𝘀𝘁 𝘀𝗲𝗻𝗱 𝗺𝗲 𝗮 𝗺𝗲𝘀𝘀𝗮𝗴𝗲 𝘁𝗼 𝘀𝘁𝗮𝗿𝘁 𝗘𝗮𝗿𝗻𝗶𝗻𝗴 💰
because of inflation
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