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MNI INTERVIEW: US Jobless Rate Masks Slack -Blanchflower Paper

(MNI) Washington

The vacancy-to-unemployment ratio is negatively correlated with wage growth, the ex-BOE official argues.

The U.S. job market is weaker than Federal Reserve policymakers believe because officials are focused on historically-low unemployment and a high vacancy rate, but neither is correlated with wage growth, according to forthcoming research ex-Bank of England MPC member David Blanchflower shared with MNI.

Fed Chair Jerome Powell told reporters this week that the labor market is “extremely tight,” pointing to rapid employment growth, a 3.6% jobless rate and a large number of job openings. He and other officials say this strength suggests the economy can avoid a recession despite rapidly rising interest rates.

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The U.S. job market is weaker than Federal Reserve policymakers believe because officials are focused on historically-low unemployment and a high vacancy rate, but neither is correlated with wage growth, according to forthcoming research ex-Bank of England MPC member David Blanchflower shared with MNI.

Fed Chair Jerome Powell told reporters this week that the labor market is “extremely tight,” pointing to rapid employment growth, a 3.6% jobless rate and a large number of job openings. He and other officials say this strength suggests the economy can avoid a recession despite rapidly rising interest rates.

Keep reading...Show less