SAN FRANCISCO (Reuters) — U.S. labor market signals are conflicting to an "unprecedented" degree, but those suggesting labor market slack should be given more weight than those pointing to tightness,
U.S. labor market signals are conflicting to an "unprecedented" degree, but those suggesting labor market slack should be given more weight than those pointing to tightness, according a paper published Monday by the San Francisco Federal Reserve Bank. The paper looked at 26 labor market measures that typically move in tandem and found that during the current recovery they are giving wildly divergent signals about the health of the job market. The job openings rate, for instance, suggests the job market is much tighter than the unemployment rate; the labor force participation rate points to much more slack than detected in the unemployment rate.
Elevated Unemployment Benefits May Be Stymieing Economic Growth June 1, 2021
Pay enough attention to U.S. economic data this year, and you’re likely to hear plenty about three big themes.
Those themes are rebounding economic growth highlighted by the scorching hot first-quarter GDP reading, disappointing jobs growth, and an increasingly contentious debate regarding jobless benefits. The second and third points are related, with some market observers and plenty of politicians arguing jobless perks enacted in the wake of the coronavirus are now so good that some workers have little incentive to go after new jobs.
April’s slack employment report further highlighted the divide over jobless benefits, prompting some market observers to ponder if economic growth is being harmed by the sheer amount of unfilled jobs in the world’s largest economy.