Still lookin' good.
Hiring, job openings, and quits are not only all rising. They are all accelerating. The labor market is looking great.
My back of the envelope estimate is that the baby boomer effect (the large number of older workers) probably causes the job openings rate to be about 0.25% higher than in previous cycles, and the quits and hires rates to be about 0.25% lower. That puts the labor market cycle at about where we were in mid-to-late 2005, when the unemployment rate was around 5%.
The baby boomer effect should be pulling down the unemployment rate, because older workers tend to have less unemployment churn. Again, looking at the back of the envelope, insured unemployment correlates to about a 4.3% unemployment rate, compared to recent cycles. My simple estimates attribute about 0.8% of the additional unemployment to the very long term unemployed that appear to have mostly timed out of extended unemployment insurance before the program had ended, and another 0.5% to persistence in unemployment that appears to be typical of more frequent or extended downturns. So, I think the current labor market, accounting for these effects, does resemble the 2005-ish labor market, whether we are looking at JOLTS, insured unemployment, or unemployment durations. But, these comparisons are moving targets because of the unusual demographic situation.
Here is a Fred graph, which I think makes for interesting perusal. I think we can compare where we are now to where we were in about 2005 and 1995.
First, I would note that in 1995 when the unemployment rate levels out for a while, the Fed Funds rate topped out at about 6%, and the Fed pulled it back to 5.25%, avoiding a yield curve inversion. I think that could have something to do with the expansion that continued for another 4 years. If the Fed would have pulled back from 5.25% to, say, 4.5% in 2006, I think that 2007-2010 would have looked more like the late 1990's. Home prices would have moderated, but not collapsed. There would have been a slight hump in unemployment, then a continuation of the expansion. Note that following the small decline in the Fed Funds rate in 1995, real wages rose, but inflation didn't.
Also, notice in 2005 when real wages started to rise, they were not accompanied by rising inflation. Actually, despite the frequent framing of current Fed policy in terms of "wage inflation" there is no evidence of this sort of relationship over the past 50 years. We are at a point in the cycle where real wages should see a healthy rise. Inflation will be related to other issues.
If lending doesn't loosen up, inflation will come from a supply shock in housing, and, ironically, this looks like it will be widely attributed to wage inflation, with tighter monetary policy the cure. That will be completely wrong, but it will appear as if it is right. Considering how little evidence there is now in the historical data for "wage inflation", I doubt that it will take much for that narrative to be widely seen as confirmed.
Somebody should write about this housing problem. A long time ago, this one blogger started a fascinating series on the topic, but he's gone AWOL. He was last seen in the alley behind the local mall, a bottle of gin in his hand, his hair disheveled, filthy, a wild look in his eye, mumbling something about effective rates of return to frightened passersby.