KC Fed LMCI Suggests Recent Inflation Is Not Due to the Tight Labor Market

Glover, Andrew; Mustre-del-Rio, Jose; Pollard, Emily

Journal Article

KC Fed LMCI Suggests Recent Inflation Is Not Due to the Tight Labor Market

Abstract: A tight labor market tends to raise wages and lower unemployment, but an overly tight labor market can cause inflation. Labor market momentum, as measured by the Kansas City Fed Labor Market Conditions Indicators (LMCI), can signal whether the current level of activity in labor markets is inflationary.

Keywords: Labor Market; Unemployment; Labor Market Conditions Indicators (FRB Kansas City LMCI); COVID-19; Pandemic;

JEL Classification: J20; J23;