I'm personally concerned about the wage inflation spiral.
Wage hikes are very sticky. They raise the base cost floor on everything.
Job openings to unemployed ratios are still at historic highs.
Anecdotally, in Canada our health care system seems to be breaking as support workers (nurses and technicians) leave for better paying less stressful jobs. Fastfood restaurants operate on reduced hours for lack of staff as service industry employees went to white collar/admin/trade jobs.
There needs to be enough layoffs to move people out of unnecessary/discretionary rolls back into necessary rolls. Recessions generally tend to drive labour efficiency which also seems to be desperately needed.
While I do think we get a housing market correction with rates and these levels, I'm not sure that it is enough. Savings levels are very elevated. While discretionary spending is slowing, people can dip into their savings for some time to cover the wage/inflation delta.
All this rambling to say, like you, I think rates need to go much higher than the market currently has priced in before we can get to easing.
I'm personally concerned about the wage inflation spiral.
Wage hikes are very sticky. They raise the base cost floor on everything.
Job openings to unemployed ratios are still at historic highs.
Anecdotally, in Canada our health care system seems to be breaking as support workers (nurses and technicians) leave for better paying less stressful jobs. Fastfood restaurants operate on reduced hours for lack of staff as service industry employees went to white collar/admin/trade jobs.
There needs to be enough layoffs to move people out of unnecessary/discretionary rolls back into necessary rolls. Recessions generally tend to drive labour efficiency which also seems to be desperately needed.
While I do think we get a housing market correction with rates and these levels, I'm not sure that it is enough. Savings levels are very elevated. While discretionary spending is slowing, people can dip into their savings for some time to cover the wage/inflation delta.
All this rambling to say, like you, I think rates need to go much higher than the market currently has priced in before we can get to easing.
agreed~ wage spiral is probably happening because of the labor shortage.