Slowing Employment Prospects Suggests Room for a Pause in Rate Hikes

Jan 9, 2023 | Macro Insights, No Bull Economics


A softening labor market is evident in declining new hires & increasing layoffs. Hopefully, the Fed notices the beginning of its mandate to attack inflation by lowering labor costs.

Key Points

According to our recent post, the Fed reported that it has yet to observe much softening in a very strong labor market which is marked by high job & wage growth and elevated job vacancies. This is key as the largest component of the PCE inflation index (55% of the total) is non-housing related core services which is primarily driven by labor costs. As the data is beginning to tell a different story, perhaps the Fed can start to moderate its hawkish stance by taking its foot off the interest rate hike accelerator.

Layoffs Chart
Layoffs/Hires Chart
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