The Labor Market Is Not The Source Of Inflation

  • For inflation to become ingrained, we need inflationary expectations to blow up and cause a wage-price spiral to take hold.
  • Decades of losing bargaining power are making the labor market an unlikely source of inflation, despite a very tight labor market.
  • With an already easing labor market, these risks are further decreasing despite efforts of wages to catch up with inflation.
  • Supply constraints are also easing and the world economy is rapidly deteriorating, so we expect light at the end of the monetary tightening tunnel to appear sooner than many people seem to think.
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The Labor Market Is Not The Source Of Inflation | Seeking Alpha