Jobs Data Show Fed Tightening Is Right Course, Princeton's Kruger Says

The transcript discusses the recent labor market data, highlighting a decline in labor force participation and stronger-than-expected wage growth. This suggests the Federal Reserve's current tightening policy is appropriate. The bond market is reacting to signs of inflation, with average hourly earnings reaching a high of 2.9%. Fed President John Williams' comments on wage pressures are seen as dovish, but recent data confirms nascent wage pressures, indicating potential further rate hikes. The labor market is near full employment, despite a 3.9% unemployment rate, suggesting limited slack.

What does the decline in the labor force participation rate suggest about the labor market?

How does the current wage growth relate to the expectations set by the Federal Reserve?

What implications does the average hourly earnings data have for inflation expectations?

In what way did the market react to the signals from Fed President John Williams?

What does the current unemployment rate indicate about the state of full employment?