Will a Cooler Labor Market Slow Supercore Inflation?

Sylvain Leduc, Daniel Wilson and Cindy Zhao

FRBSF Economic Letter, 2023, vol. 2023, issue 18, 6

Abstract: Given steady declines in price inflation for core goods and expectations that rent inflation will moderate over time, the outlook for nonhousing core services—or “supercore”—inflation has grown in importance. State-level data document a typically weak relationship between this indicator and unemployment rates, highlighting the stickiness of supercore inflation. The data show that its sensitivity to labor markets strengthened early in the pandemic recovery in connection with strong demand for service workers. However, it’s uncertain whether this sensitivity will remain heightened or return to its persistent pre-pandemic weakness.

Keywords: inflation; core inflation; housing (search for similar items in EconPapers)
Date: 2023
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