Will Risk Assets Keep Rallying Into 2024?
Real Vision: Finance & Investing
The Influence of Wage Inflation and Demographics on Labor Market
Inflation is expected to reset to a higher level with nominal growth and long-term interest rates also increasing. Wages play a crucial role in determining inflation levels, with a 4-5% wage growth suggesting inflation in the same range. The current labor market dynamics, influenced by demographics such as retiring baby boomers and a smaller Gen Z workforce, are creating a shortage of workers and giving employees more bargaining power. The reduced impact of labor arbitrage due to shifts away from outsourcing to countries like China is leading to a scenario where unions regain power and employers have to share more profits with employees. This shift is evidenced by the increase in work stoppages and strikes, signaling a reevaluation of the value of labor compared to capital in the broader economy.
Remember Everything You Learn from Podcasts
