One reason U.S. inflation might be hotter than the rest of the world is how countries decided to help their workers in the early days of the pandemic. The U.S. mostly relied on generous unemployment benefits and direct stimulus checks, while Europe and Japan, by contrast, mostly relied on furlough programs. Hyun Song Shin, economic adviser and head of research at the Bank for International Settlements, finds that in some respects, the differing strategies got the jobs market back to similar places. Since the fourth quarter of 2019, the change in hours worked followed similar paths. But the composition was far different. In the U.S., the rise in average hours worked was mostly due to lower unemployment, as well as a pickup in participation in the jobs market. In other developed markets, Shin found, the rise in average hours worked reflects workers taking on more hours at the same companies where they were previously employed…… The U.K., he concedes, is one place that did rely on furlough programs but also has seen a rise in job vacancies. But in most advanced economies, average wage growth is more or less in line with pre-pandemic trends, or a little below. “It is notable, however, that in the United States, where labor market changes are most apparent, wage growth has picked up despite labor market conditions that appear weaker than before the pandemic,” he said.Oh no! Stronger wage growth from not having to settle for garbage pay! Not that! God forbid! NOOOOOO!!!! The article also includes these charts which show that the US has the smallest decline in total hours worked vs the start of the pandemic, while also being the only one that has seen a rise in average hours worked, indicating that a lot of crappy low-pay, part-time jobs have now been phased into better paying work for fewer employees.
Thursday, December 9, 2021
All that COVID aid likely explains higher US inflation. And it beats the alternative
Found an article from CBS Marketwatch today that went over a new study from an international organization compared the COVID economic responses across nations, and it feels important to know ahead of tomorrow consumer inflation report in America. This report said a big reason that the US has inflation (6.2% year-over-year) than the euro zone (4.2%) and especially Japan (0.1%) is because of CARES and other COVID relief packages, which took on a different type of support in the US.
Posted by Jake formerly of the LP at 7:58:00 PM