“Tight” Labor Markets Not Really All That Tight

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Monika Bauerlein,
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The Wall Street Journal passes along good news today:

Fed’s Beige Book: ‘Tight Labor Markets’ Are Pushing Up Wages

Tight labor markets are good. But how tight are they, really? The full Fed report is here. Here’s the super-abridged version of the twelve regional reports:

Boston: Labor demand was robust.
New York: The labor market has continued to tighten.
St. Louis: Wage growth was strong.
Philadelphia: Wage pressure was modest.
Richmond: Labor demand rose moderately.
Atlanta: Wage pressure was modest.
Chicago: Wage pressure picked up some.
Minneapolis: Wage pressure was moderate.
San Francisco: Wage inflation picked up somewhat.
Kansas City: Wages grew slightly.
Dallas: Wage pressures were minimal.
Cleveland: Payrolls were little changed on balance.

I score it like this: Three districts reported strong labor demand; six reported modest tightening; and three reported minimal change. There’s some good news here and there, and overall growth seems to be decent, but that’s about it. There’s certainly not the slightest suggestion that labor markets are truly tight, or in any danger of overheating. Nor is inflation is danger of overheating: it’s still piddling along at well under the target range of 2 percent. As former Fed governor Narayana Kocherlakota says, there’s simply nothing either here or in the official inflation figures to suggest that the Fed should do anything to put the brakes on the economy right now.