Compared with previous post, CPI is slowing down, labor cost is on focus. (Chart 1).
Compensation cost growth peak in Q3 and growth decrease to 1% level in Q4, but still 0.5% higher than normal level (0.5%), which confirms labor cost still drive inflation. (chart 2).
Labor force participation rate improves month over month, although not significant. More observation needed. But from a guess, Covid pandemic is almost gone, this should drive more people back to normal life and work. but of course, those retired may never come back to work.
The surprise strong labor data (payroll employment rise by 517k in Jan), may drive FED to keep interest rate higher and longer. I’m still a bit skeptical whether this strong employment data is driven by labor demand, or from labor supply. Let’s see.