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 was surprising about the labor force participation rate in the report?

• It increased significantly.

• It remained unchanged.

• It declined unexpectedly.

• It was not mentioned in the report.

What is the significance of the average hourly earnings reaching 2.9%?

• It indicates a decrease in inflation.

• It is the highest level in a while, suggesting inflation signs.

• It shows a decline in wage pressures.

• It means the Fed will not change its policy.

How did the market react to Fed President John Williams' comments?

• The market ignored the comments.

• The market saw them as a hawkish signal.

• The market rallied, interpreting them as dovish.

• The market became more volatile.

What does the decline in labor force participation suggest about employment?

• There is significant slack in the labor market.

• The labor market is close to full employment.

• The economy is far from full employment.

• Wage growth is not affecting employment.

Why might the Fed consider raising rates two more times?

• Due to declining wage pressures.

• To decrease the unemployment rate.

• Because of nascent signs of wage pressures.

• To increase labor force participation.