Ghosting in the US job market
We’ve covered US wage growth and the resulting upside risk to inflation in a number of prior commentaries and now see more leading indicators suggesting that theme is accelerating (refer to – ‘Wages, Wages, Wages’ for details).
Ghosting is a term that originated in the millennial dating world and refers to the practice of suddenly ending a relationship with no communication and no explanation.
As LinkedIn and others report, the US labour market is now so tight that job candidates are ghosting employers after receiving job offers. They are getting so many job offers they don’t even bother responding anymore.
In a more conventional example, restaurant chain Cheesecake Factory’s stock was down 14% when earnings disappointed expectations, largely due to rising labour costs. And for the first time since 2000 (just before the dot com crash) US job openings exceed the number of people looking for work.
There is increasing evidence that US economic growth is now strong enough that capacity constraints are becoming an issue, and this is happening at a time when the government is also engaging in fiscal stimulus.
Plenty of fuel for a bonfire of inflation that can force the Federal Reserve to hike rates much more aggressively than markets are currently expecting … that would be bad for bonds and bad for equities.
Ardea Investment Management