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The Effects of the “Great Resignation” on Labor Market Slack and Inflation
The fraction of Americans switching their jobs has been increasing at a fast pace in the past 18 months, reaching its highest level on record. According to the U.S. Department of Labor, more than 4.5 million people voluntarily left their jobs in November 2021—the largest figure in the past two decades. This period has been dubbed the Great Resignation. At the same time, wages and salaries have accelerated considerably and by the end of 2021, inflation had hit its highest level since 1982.
Newsletter
The Recent Steepening of Phillips Curves
The Phillips curve captures the empirical inverse relationship between the level of inflation and unemployment. The reciprocal of its slope, sometimes referred to as the “sacrifice ratio,” represents the increase in the unemployment rate associated with a 1 percentage point reduction in the inflation rate. In this Chicago Fed Letter, we provide evidence that the Phillips curve has steepened in many industrialized countries since the start of the recovery from the Covid-19 pandemic. This suggests a lower sacrifice ratio now than before 2020.
Newsletter
What Is Driving U.S. Inflation amid a Global Inflation Surge?
In June 2022, the 12-month inflation rate of the U.S. Consumer Price Index (CPI) hit 9.1%, its highest level in over 40 years. The U.S. is not alone: Across the industrialized world, inflation is accelerating during the recovery from the pandemic recession. Although inflation is surging globally, the sources of inflation are different in each country.