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Federal Reserve Bank of Chicago
Chicago Fed Letter
What Does Labor Market Tightness Tell Us About the End of an Expansion?
Scott A. Brave
David Kelley
Abstract

We use a model based on the historical relationships between unemployment, inflation, and recessions, along with the Summary of Economic Projections (SEP) from the Federal Open Market Committee (FOMC),1 to examine the medium-term implications of current and projected unemployment rates for the U.S. economy. Our model predicts a low probability of a recession in the next two to three years based on SEP forecasts for additional labor market tightening over this horizon.


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Scott A. Brave & David Kelley, "What Does Labor Market Tightness Tell Us About the End of an Expansion?" , Federal Reserve Bank of Chicago, Chicago Fed Letter, number 403, 2018.
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Keywords: Labor market; inflation; unemployment; recessions; wages
DOI: 10.21033/cfl-2018-403
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