WASHINGTON (AP) – This isn’t explained in Econ 101.
Month after month, U.S. hiring keeps rising, and unemployment keeps falling. Eventually, pay and inflation are supposed to start surging in response.
They’re not happening.
Last month, employers added a healthy 252,000 jobs – ending the best year of hiring since 1999 – and the unemployment rate sank to 5.6 percent from 5.8 percent. Yet inflation isn’t managing to reach even the Federal Reserve’s 2 percent target rate. And paychecks are barely budging. In December, average hourly pay actually fell.
Economists are struggling to explain the phenomenon.