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Yahoo Finance’s Myles Udland, Brian Sozzi, and Julie Hyman discuss rising wages and the overall economy’s winding road to recovery.
This article first appeared in the Morning Brief. Get the Morning Brief sent directly to your inbox every Monday to Friday by 6:30 a.m. ET.
Thursday, June 10, 2021
The economy’s winding road to recovery continues
On Thursday morning, the highly-anticipated consumer price index report for May will be released.
This data is expected to show inflation rising at its fastest pace in at least 13 years and, by some measures, in almost three decades.
We wrote recently about the tension between the Fed’s view that these price pressures will pass in time while some investors remain skeptical. A resolution on this disagreement will not be found after today’s data is released.
And while unresolved debates over the state of the recovery might seem to suggest that something has gone wrong in the economy’s healing process, today’s crosscurrents are actually quite normal for an economic recovery. It is the magnitude of some mismatches, however, that remains most jarring.
Earlier this week, Neil Dutta, an economist at Renaissance Macro, dropped a note framing the labor market rebound as one in which the market is acting normally in the context of a situation that isn’t exactly healthy.
The normal part of this recovery is what we’re picking up in labor surveys and inflation data. How many workers remain unemployed and by how much some prices are up is unhealthy.
On Tuesday morning, for instance, the latest JOLTS report showed a record 9.3 million jobs were open at the end of April, a record for the series which dates back 20 years. The report also showed workers are quitting their jobs in droves. Encouragingly, these quits are garnering a response from employers.
“Industries with higher quits rates are the ones reporting faster growth in average weekly earnings over the last few months,” Dutta writes, highlighting that average weekly wages for leisure & hospitality workers are up 10% over the last three months. The leisure & hospitality quits rate as of April stood at 5.3%; a year ago it was 3.6%. The private sector’s overall quits rate in April was 3.1%.
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