Richmond Fed President Barkin said the U.S. economy may be entering an era of prolonged labor supply constraints. That situation will continue to put upward pressure on inflation, and companies may need to pay more to attract and retain talent, he said.
The governor will give a lecture in Virginia on the 2nd. “The labor supply is likely to continue to be constrained,” he said, according to a manuscript distributed in advance. “With Americans still saving around $1.3 trillion above pre-coronavirus pandemic levels and fiscal stimulus continuing, demand will continue to rise. The Fed’s efforts to restore balance will not be easy.” The manuscript was prepared before the release of US employment statistics in November.
According to the US employment statistics for November, the number of nonfarm payrolls increased by 263,000 from the previous month, exceeding market expectations. This suggests that demand for labor continues to be strong once morest the backdrop of solid consumer demand.
U.S. jobs grow faster than expected, average hourly wage picks up, puts pressure on Fed (2)
Birkin cited the net decline in immigrants, the complex situation caused by the pandemic, and retirement as causes of the labor shortage, and said, “We are moving from an environment of abundance to a shortage of labor. I am raising concerns regarding
“The financial authorities have taken aggressive actions to curb inflation. “Nevertheless, demand for labor continues to outstrip supply,” he said.
news-rsf-original-reference paywall">Original title:Barkin Sees Long-Term US Labor Constraint Keeping Inflation Heat(excerpt)