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May 2022 / VIDEO

A Labor Demand and Supply Imbalance Challenges the Fed

Labor demand has considerably outpaced supply, but the job market tightness can ease if more workers join the labor market.

Key Insights

  • U.S. labor demand has considerably outpaced the supply of workers during the recovery from the pandemic-induced recession in 2020.
  • This labor market tightness has contributed to upward pressure on wages and made the Fed’s task of taming inflation more difficult.
  • The labor market may not be as tight as the headline unemployment rate makes it appear, as more workers can join the job market.


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