U.S. Economic Growth - Mediocrity Rules

Looking at U.S. data in isolation, I see very little to distinguish the current environment from the rest of the post-2010 period. (There was a strong bounce after the recession, which is unsurprising given the extent of the drop in activity. To use a phrasing popular amongst market commentators, it was a "dead cat bounce.") I believe that the unemployment rate is essentially broken as an indicator, and there is no reason to expect a pickup in inflation on any reasonable time frame. On the other hand, I still do not see enough weakness to justify the panic periodically seen in the risk markets over the past couple of months.

Labor Market Conditions Index - The Right Answer To The Wrong Question?

The latest innovation in Fed-watching is the Labor Market Conditions Index (LMCI), which was developed by Chung, Fallick, Nekarda and Ratner in a working paper (FEDS Notes). This work was referred to by Fed Chair Janet Yellen in her Jackson Hole speech. If you want to measure the slack in the labour market, something like the LMCI is probably the best way to do it. But my concern is that the assumption that we can aggregate the employment situation into a single market is misleading, and the current environment is more easily understood if we dis-aggregate the labour market. Unfortunately, this is easier said than done. My comments here will be relatively brief, as I had been busy enjoying the summer over recent weeks.