Tuesday, January 13, 2015

November 2014 JOLTS

JOLTS data continue to come in strong.  Older workers tend to have lower unemployment but longer unemployment durations.  Specialization, better personal financial safety nets, etc. create frictions in re-employment so that I think we are seeing demographic-based movements in openings and quits.  Openings are higher, quits are lower, and hires are lower.  If we split the difference between openings and quits, JOLTS data suggest the labor markets are comparable to something around late 2005.

The unemployment rate was under 5% then.  I had been expecting this to mean that we would continue to see the unemployment rate drop sharply, but I am starting to think that there is some persistence in measured unemployment.  There might have been a shift right in the Beveridge Curve (x=unemployment, y=openings), even after adjusting for demographics, as there had been in the 1970's and 1980's after there had been several recessions in relatively short succession.  Basically a higher NAIRU, I guess, which I guess is basically the consensus view right now.

So, while I don't abide the supposed fear of wage-inflation, I do think that we should see the benefits of an economy running at full employment, even if the unemployment rate is a little high, which should mean higher RGDP growth, decreasing risk premiums, increasing real wage growth, and increasing real interest rates.  According to JOLTS, we are a long way from any concerns.


  1. The gravestone of contemporary Macro will read: 'Like NAIRU; except inflation doesn't accelerate'
    But I get what you mean.

    1. That would be great, wouldn't it? I think NAIRU only looks like NAIRU because a fluctuating natural rate tends to make the Fed pro-cyclical. Now the Fed has gotten so hawkish that pro-cyclical just means policy isn't disinflationary for a little while....