Tightest U.S. Job Market Since 1950s Set to Drive Inflation

• Fueled by a persistent shortage of available workers, wage pressures will take over as the dominant driver of U.S. inflation in the second half of next year, according to Jefferies Group LLC. 
• “We believe the U.S. is entering the tightest labour market conditions since the 1950s,” Aneta Markowska, chief financial economist at Jefferies, wrote in a note Monday. As a result, wage pressures are unlikely to ease next year, keeping inflation elevated even as supply chain bottlenecks abate. 
• While transitory factors have accounted for about 1.5 percentage points of the core consumer price index increase over the past year, tightness in the labour market is contributing nearly 1 percentage point and that “is unlikely to change,” Markowska said. Excluding food and energy, consumer inflation is up 4.6% from a year earlier, the most since 1991.

(Source: Bloomberg)