Chief Economist and Strategist at Market Securities since 2011, Christophe Barraud has been awarded by Bloomberg the title of Top Forecaster of the U.S. Economy (2012-2020), Eurozone Economy (2015-2019), and Chinese Economy (2017-2020). He also won the Forecaster of the Year contest organized by MarketWatch in 2020.
Latest FOMC Minutes and recent speech from both Reserve Bank of St. Louis President James Bullard suggested that the Federal Reserve is not only on track to raise rates faster than expected but can also implement quantitative tightening as soon as 2022. Such a scenario would be coherent with my view that the risk of a wage-price spiral is now real with low-income families asking for higher salaries.
The Labor market is probably tighter than indicated by the unemployment rate
Most of the indicators suggest that, right now, the labor market is probably tighter than indicated by the unemployment rate (at 3.9% in December 2021). As a matter of fact, the excess of job offers compared to unemployed exceeded 3.7 million in November 2021.
Over the same period, the quits rate in the private sector hit another record high, which implies that wages growth will keep accelerating in the coming months. Reuters highlighted that “workers walking away from jobs in record numbers, particularly from lower-paid and often front-line service-sector positions where health risks are considered more acute and work-from-home options less available.“
Read the full article here.
