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Journal Article
KC Fed LMCI Implies the Labor Market Is Closer to a Full Recovery than the Unemployment Rate Alone Suggests
By consolidating information from a broad range of labor market variables, the Kansas City Fed Labor Market Conditions Indicators (LMCI) provide a consistent gauge of labor market tightness. Adjusting the unemployment rate to incorporate information from the LMCI suggests the labor market is closer to a full recovery than the unemployment rate alone implies.
Journal Article
The KC Fed LMCI Momentum Indicator Suggests Monetary Policy Is Beginning to Weigh on Labor Markets
The Federal Open Market Committee has been quickly raising the federal funds rate to lower inflation. However, services inflation remains high, supported by a tight labor market with high wage growth. Recent readings in the LMCI momentum indicator suggest monetary policy tightening is beginning to weigh on labor markets, which may eventually lead to lower services inflation and lower inflation overall.
Journal Article
KC Fed LMCI Suggests Recent Inflation Is Not Due to the Tight Labor Market
A tight labor market tends to raise wages and lower unemployment, but an overly tight labor market can cause inflation. Labor market momentum, as measured by the Kansas City Fed Labor Market Conditions Indicators (LMCI), can signal whether the current level of activity in labor markets is inflationary.
Journal Article
Labor Market Cooling Has Been Uneven Across Industries
The U.S. labor market has cooled over the last two years but remains healthy overall. However, an industry-specific version of the KC Fed’s Labor Market Conditions Indicators (LMCI) suggests pockets of tightness and weakness have appeared in a few industries. Tightness appears to be limited to less labor-intensive industries, limiting upside risk to inflation. Weakness, on the other hand, has appeared in the interest-rate-sensitive information industry, which may be vulnerable to further labor market cooling.
Briefing
A New Approach to Industry and Occupation Recoding in the CPS
This paper presents a new approach to recoding industry and occupation in the Current Population Survey (CPS) from 1976 to 2019. This recode uses the three- and four-digit Census codes present in the CPS to create consistent aggregate categories that closely align with the detailed and major industry and occupation categories used in the 2019 CPS. This approach yields more consistent aggregate categories than previous recoding schemes. This approach can also successfully be applied to recoding industry and occupation in all panels of the Survey of Income and Program Participation (SIPP).
Journal Article
Inflation Expectations Limit the Power of Negative Interest Rates
Both the federal funds rate and longer-run yields have dropped to near zero, renewing discussion of negative interest rate policy. Although negative rates would allow for additional cuts in the United States, negative policy rates in line with what other countries have implemented would not be able to achieve the nominal rate reduction of previous easing cycles. Moreover, inflation expectations remained flat or fell after negative rates were introduced in most countries, limiting the expansionary power of these additional rate cuts.
Journal Article
The Rise and Fall of College Tuition Inflation
The cost of college tuition increased rapidly from 1980 to 2004 at a rate of about 7 percent per year, significantly outpacing the overall inflation rate. Since 2005, college tuition inflation has slowed markedly and has averaged closer to 2 percent per year for the last few years. Understanding what drives tuition inflation is important for predicting future tuition as well as personal income mobility. However, untangling the various supply and demand factors influencing college tuition can be challenging. {{p}} Brent Bundick and Emily Pollard document changes in college tuition inflation ...
Journal Article
Does the Recent Decline in Household Longer-Term Inflation Expectations Signal a Loss of Confidence in the FOMC?
Households have lowered their longer-term inflation outlooks, but they appear confident in the FOMC?s ability to achieve stable prices.
Journal Article
Negative Sentiment toward Spending and Declining Real Incomes May Meaningfully Lower Consumption
Despite a contraction in real GDP in the first half of 2022, consumer spending has remained resilient. We examine a set of factors that have historically affected consumption growth and find that excess savings have boosted consumer spending during the COVID-19 pandemic. However, as excess savings decline and economic relationships normalize, negative sentiment toward spending and declining real incomes may meaningfully lower consumption.
Journal Article
Foreign-Born Women Have Driven the Recent Increase in Prime-Age Women in the Labor Force
The labor force participation rate of prime-age (25 to 54) women declined dramatically during the pandemic-led recession but has since recovered to an all-time high. We examine how different groups have contributed to this rebound and find that foreign-born women, particularly those with a bachelor’s degree, account for most of the increase in the number of prime-age women in the labor force. Immigration, in turn, fueled the increase in the number of foreign-born women in the labor force.