Bostic - Recovery In Labor Force Has Helped Faster Decline In Inflation

Atlanta Fed’s Bostic (’24 voter) said in prepared opening remarks that the recovery in the U.S. labor force has contributed to a faster-than-expected decline in inflation.

Bostic has been somewhat fluid on his standing on the FOMC dove-hawk spectrum, previously leaning dovish before revealing an above median end-2024 dot in the Dec SEP implying two cuts this year. He did not directly address the outlook for monetary policy today.

• “More recently, the surprises in labor force participation have been to the upside. For example, women have returned to the labor market in force, and have enjoyed some of their highest participation rates in U.S. history,” […] “This has contributed to supply increasing more than many expected, feeding a more rapid decline in inflation than many had forecast.”
• “Policymakers’ views as to how low the jobless rate could go without sparking inflation have changed in recent years. “When I started this job in 2017, the accepted wisdom was that full employment meant an unemployment rate of roughly 4.5%. Well, that’s changed” .
• “Outside the brief but severe pandemic recession, unemployment has been below 4.5% for nearly seven years, and in many months by a significant amount. My colleagues have acknowledged this shift,” pointing to a median long-run jobless rate forecast of 4.1% in the FOMC’s Summary of Economic Projections.