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> Strong labor numbers means wages would be increasing. Wages are increasing, that's one of the inflation drivers people are complaining about. > What would b

by ajross 4y ago

> Strong labor numbers means wages would be increasing. Wages are increasing, that's one of the inflation drivers people are complaining about. > What would be an issue is the labor participation rate decreasing, which it is Not per FRED: https://fred.stlouisfed.org/series/CIVPART https://fred.stlouisfed.org/series/CIVPART It's quite clearly still rebounding from the covid shock. I think you're trying to say that the long term trend is clearly downward. But the subject at hand is the immediate economic environment ("strong labor numbers", "hiring freeze", etc...). And clearly there's nothing wrong instantaneously with either participation rate nor wages. Those numbers are in fact good, not bad.

WillPostForFood 4y ago
If you zoom in on the FRED graph, you can see the recent rebound participation rate peaked in March, and has started a (slight) decline in the last quarter.
- ajross 4y ago
  Don't do that. You're literally interpreting noise as signal. Look at the random wiggles elsewhere in the graph, they're the same size as the thing you're trying to interpret meaning from. Economics data just doesn't work on the timescale you want it to.
smaryjerry 4y ago
Real wages are not increasing. The ‘Real’ part of real wages means after adjustment for inflation. See link, we’ve been going straight down in real wages. We are already back below pre-COVID wages. That means we are back to wage levels around 3 years ago. In any job if you got no raise in 3 years then you should not look at that as a good thing - and that’s what has happened to everyone, on average after accounting for inflation. https://fred.stlouisfed.org/series/LES1252881600Q https://fred.stlouisfed.org/series/LES1252881600Q
- ajross 4y ago
  That's arguing about leading/lagging indicators, though. Wages go up with inflation, more or less by definition. Wage increases due to inflation can't be measured until after the fact, though. Short version: "inflation" is not remotely the same thing as "recession", which seems to be the point you're trying to make. If your only evidence for an economic slowdown is prices and not production or consumption, you're likely confusing factors. Clearly the truth is that the labor market remains strong. Most people are working. Most people have multiple choices in jobs. Most people are making more money (yes, in nominal dollars) than they were last year. Those are all signs of a healthy economy. They are not the only signs of a healthy economy, and there can be other aspects (like inflation) which are less desirable[1] [1] Though probably 80% of the people who like to yell about it don't really understand it well. Inflation, by reducing the size of existing investments and debts (i.e. "stuff wealthier people have") relative to the economy as a whole (i.e. "wage levels for everyone"), acts naturally to reduce income and asset inequality. It's not entirely a bad thing.
  - smaryjerry 4y ago
    You are intentionally conflating nominal and real wages, most people are not making more money. In real wages they are declining as per the link in my previous comment. If you make $100K per year and your expenses are $100K you make zero. If you make $150K but your expenses are now $150K then you have not made any increase in wages in real dollars. Wages are not flat or going up with inflation as per my link, they are actually declining significantly since COVID.
    - ajross 4y ago
      And my point, which you missed, is that this is a confounded argument. "Real wages" are an after-the-fact metric, you can't measure it in immediate data because wage growth and inflation are highly correlated. And the other point, which you skipped, was that this was a digression anyway from the upthread discussion about whether or not the labor market indicators are "strong" or not. And they are: wages are tracking labor demand and growing at the same time participation is growing. That means the market is operating well (and, FWIW, that typical models would expect wage growth to continue to match inflation, as it generally does in functioning markets).

by ajross 4y ago

WillPostForFood 4y ago

If you zoom in on the FRED graph, you can see the recent rebound participation rate peaked in March, and has started a (slight) decline in the last quarter.

ajross 4y ago
Don't do that. You're literally interpreting noise as signal. Look at the random wiggles elsewhere in the graph, they're the same size as the thing you're trying to interpret meaning from. Economics data just doesn't work on the timescale you want it to.

smaryjerry 4y ago

Real wages are not increasing. The ‘Real’ part of real wages means after adjustment for inflation. See link, we’ve been going straight down in real wages. We are already back below pre-COVID wages. That means we are back to wage levels around 3 years ago. In any job if you got no raise in 3 years then you should not look at that as a good thing - and that’s what has happened to everyone, on average after accounting for inflation. https://fred.stlouisfed.org/series/LES1252881600Q https://fred.stlouisfed.org/series/LES1252881600Q

ajross 4y ago
That's arguing about leading/lagging indicators, though. Wages go up with inflation, more or less by definition. Wage increases due to inflation can't be measured until after the fact, though. Short version: "inflation" is not remotely the same thing as "recession", which seems to be the point you're trying to make. If your only evidence for an economic slowdown is prices and not production or consumption, you're likely confusing factors. Clearly the truth is that the labor market remains strong. Most people are working. Most people have multiple choices in jobs. Most people are making more money (yes, in nominal dollars) than they were last year. Those are all signs of a healthy economy. They are not the only signs of a healthy economy, and there can be other aspects (like inflation) which are less desirable[1] [1] Though probably 80% of the people who like to yell about it don't really understand it well. Inflation, by reducing the size of existing investments and debts (i.e. "stuff wealthier people have") relative to the economy as a whole (i.e. "wage levels for everyone"), acts naturally to reduce income and asset inequality. It's not entirely a bad thing.
- smaryjerry 4y ago
  You are intentionally conflating nominal and real wages, most people are not making more money. In real wages they are declining as per the link in my previous comment. If you make $100K per year and your expenses are $100K you make zero. If you make $150K but your expenses are now $150K then you have not made any increase in wages in real dollars. Wages are not flat or going up with inflation as per my link, they are actually declining significantly since COVID.
  - ajross 4y ago
    And my point, which you missed, is that this is a confounded argument. "Real wages" are an after-the-fact metric, you can't measure it in immediate data because wage growth and inflation are highly correlated. And the other point, which you skipped, was that this was a digression anyway from the upthread discussion about whether or not the labor market indicators are "strong" or not. And they are: wages are tracking labor demand and growing at the same time participation is growing. That means the market is operating well (and, FWIW, that typical models would expect wage growth to continue to match inflation, as it generally does in functioning markets).