How US demographics complicate the Fed’s job
Ageing population and pandemic legacy are confounding economists’ predictions
As the US Federal Reserve tightens policy, one element has consistently confounded economists: the labour market. The good news for the Fed is that unemployment has hardly moved, despite expectations of job losses as rates rise.
The bad news is persistently low participation could be harming the economy, and is also proving very difficult to understand. Economists who spoke to Central Banking say the changing structure of the labour force could be a problem for years to come.
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