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Whose Wages Are Falling Behind the Least amid Surging Inflation?
For a majority of workers, wages didn’t increase as fast as inflation in the 12 months ended in second quarter 2022. Here, we dig deeper to see how outcomes may have differed across groups of workers.
What’s Up (or Not Up) with Wages?
This is the third of three articles that talk about the natural rate of unemployment, the unemployment rate that would prevail in a “neutral” labor market after removing all movement due to the business cycle.
Journal Article
The Anchoring of US Inflation Expectations Since 2012
The stabilization, or anchoring, of inflation expectations at a target can help a central bank meet its goals. This paper develops a measure of expectations’ anchoring that combines the deviation of a consensus forecast from an inflation target with forecaster disagreement. We apply the measure to survey-based forecasts of PCE price inflation at medium- and longer-run horizons. Following the FOMC’s 2012 announcement of a 2 percent inflation target, the anchoring of both forecast series steadily improved through 2020:Q4. Recently, while longer-run expectations have remained well-anchored, ...
Discussion Paper
Compensation Growth and Slack in the Current Economic Environment
Following a significant slowing during the recent recession, growth in various labor compensation measures has stabilized during the past two to three years. This stabilization is puzzling because it’s widely held that a significant amount of slack remains in the economy. Accordingly, this large amount of slack should result in a further slowing in compensation (wage) growth. In this post, we show that there’s a very mild trade-off between compensation growth and resource slack, even though slack is sizable. Consequently, the observation that there’s slow but steady growth in labor ...
How Much Slack Is Left in the Labor Market?
Our analysis shows that viewing the level of employment through the lens of the employment-to-population ratio does not indicate considerable slack in the labor market.
Journal Article
Tracking productivity in real time
Because volatile short-term movements in productivity growth obscure the underlying trend, shifts in this trend may go unrecognized for years - a lag that can lead to policy mistakes and hence economic instability. This study develops a model for tracking productivity that brings in additional variables to help reveal the trend. The model's success is evident in its ability to detect changes in trend productivity within a year or two of their occurrence. Currently, the model indicates that the underlying trend remains strong despite recent weak productivity data.
Journal Article
Understanding the recent behavior of U.S. inflation
One of the most surprising features of the long current expansion has been the decline in price inflation through the late 1990s. Some observers interpret the decline as evidence of a permanent change in the relationship between inflation and economic growth. But an analysis based on a standard forecasting model suggests that conventional economic factors_most notably, a decrease in import prices_can account for the low inflation rates in recent years.
Journal Article
Leading economic indexes for New York State and New Jersey
The authors develop indexes of leading economic indicators for New York State and New Jersey over the 1972-99 period. They find that the leading indexes convey useful information about the future course of economic activity in both states. The authors then construct separate indexes to forecast recessions and expansions in each state. The movements of the recession and expansion indexes are found to display a close relationship with the behavior of the leading indexes. Accordingly, the recession and expansion indexes allow the authors to extend the informational content of the leading indexes ...
Discussion Paper
The Long and Short of It: The Impact of Unemployment Duration on Compensation Growth
How tight is the labor market? The unemployment rate is down substantially from its October 2009 peak, but two-thirds of the decline is due to people dropping out of the labor force. In addition, an unusually large share of the unemployed has been out of work for twenty-seven weeks or more—the long-duration unemployed. These statistics suggest that there remains a great deal of slack in U.S. labor markets, which should be putting downward pressure on labor compensation. Instead, compensation growth has moved modestly higher since 2009. A potential explanation is that the long-duration ...
Report
The behavior of uncertainty and disagreement and their roles in economic prediction: a panel analysis
This paper examines point and density forecasts from the European Central Bank?s Survey of Professional Forecasters. We derive individual uncertainty measures along with individual point- and density-based measures of disagreement. We also explore the relationship between uncertainty and disagreement, as well as their roles in respondents? forecast performance and forecast revisions. We observe substantial heterogeneity in respondents? uncertainty and disagreement. In addition, there is little co-movement between uncertainty and disagreement, and forecast performance shows a more robust ...