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KC Fed LMCI Suggests Recent Inflation Is Not Due to the Tight Labor Market

Author

Listed:
  • Andrew Glover
  • Jose Mustre-del-Rio
  • Emily Pollard

Abstract

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.

Suggested Citation

  • Andrew Glover & Jose Mustre-del-Rio & Emily Pollard, 2021. "KC Fed LMCI Suggests Recent Inflation Is Not Due to the Tight Labor Market," Economic Bulletin, Federal Reserve Bank of Kansas City, issue October 2, pages 1-4, October.
    • Handle: RePEc:fip:fedkeb:93295
    as

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    File URL: https://www.kansascityfed.org/documents/8464/eb21glovermustredelriopollard1020.pdf
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    References listed on IDEAS

    as
    1. Olivier Coibion & Yuriy Gorodnichenko & Mauricio Ulate, 2018. "The Cyclical Sensitivity in Estimates of Potential Output," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 49(2 (Fall)), pages 343-441.
    2. Andrew Glover & Jose Mustre-del-Rio & Emily Pollard, 2021. "KC Fed LMCI Implies the Labor Market Is Closer to a Full Recovery than the Unemployment Rate Alone Suggests," Economic Bulletin, Federal Reserve Bank of Kansas City, issue October 1, pages 1-3, October.
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    More about this item

    Keywords

    Labor Market; Unemployment; Labor Market Conditions Indicators (FRB Kansas City LMCI); COVID-19; Pandemic;
    All these keywords.

    JEL classification:

    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

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