Ben and Dominique explore the “brittle” state of the US labour market, which Dominique describes as a “low-hire, low-fire” economy currently balancing on a precarious edge. They analyse how declining participation among older workers and contracting real wages are tempering inflationary pressures, providing justification for the Federal Reserve to remain on hold. As they look toward next week’s CPI and retail sales data, focus shifts to whether a string of low inflation prints could sway “swing voters” or hawkish FOMC members like Kashkari and Hammock. Dominique notes that weakening consumption and real income may eventually highlight deep-seated economic fragilities, and she currently places a 60% probability on the Fed staying on hold for the remainder of the year.
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