VGSH - Yes The Labor Market Is Still Not Tight
2024-04-06 02:50:00 ET
Summary
- Prices will rise when the eagerness of buyers outpaces the eagerness of the sellers regardless of the depth of the market.
- This month’s labor report showed one of the sharpest slowdowns of recent years with the rate of change slowing from 4.6% to 4.2%.
- We continue to see a very tough environment for anyone who needs credit, but we also see high interest rates for anyone living on a fixed income.
One of the big lessons from the 2010-2020 environment was that headline payrolls could increase substantially without putting upward pressure on inflation. This can be confusing because there's often an assumption that more jobs mean more demand and higher prices. But it's more complex than that. Think of it like stock prices. Prices will rise when the eagerness of buyers outpaces the eagerness of the sellers regardless of the depth of the market. The same basic thing happens in the labor market. So, even if you have an increasing number of people working, the cost of that labor can actually slow if capital has more negotiating power over labor. This is essentially the story of the entire decade of the 2010s when the labor market expanded by an average of 190K per month and inflation was 1-2% almost the entire time. That occurred, in large part, because capital had so much negotiating power over labor....
Yes, The Labor Market Is Still Not Tight