On the labor front, job openings turned lower in August and the Atlanta Fed’s Wage Growth Tracker for September seems to have followed suit. On the inflation front, the year change in the median CPI reached another new high (its 7th in a row) in September.
Why It Matters:
Despite a bevy of other explanations, surging inflation has had more to do with imbalances in the labor market than anything else. A drop in job openings (while not a sign of strength) is a more preferable way to restore labor market balance than increased layoffs and unemployment. With wage growth now slowing, the hope is that inflation could soon peak. The challenge is that once the inflation genie is loose it can be hard to get under control - even if the initial causes are mitigated. In that regard, this month’s jump in inflation expectations reported with the University of Michigan Consumer Sentiment Survey is unwelcome news for the Fed.
