While the number of food service and accommodations industry workers remains a few percentage points below the pre-pandemic peak, for example, the industry's contribution to real gross domestic product has increased from that point: It is doing more with less and may not need 2019 headcount levels. Yet signs of a new status quo appear to be emerging in the job market, whether in the ongoing drop in the ratio of available workers to open jobs, a recent rise in the prevalence of part-time work, or in subtler signals. The weak June inflation reading left him unconvinced it is on a steady downward path. The current situation "still leaves us with the question whether inflation can settle while consumers are still spending and the labor market remains this robust," Richmond Fed President Thomas Barkin said last week. A central point in the Fed debate is whether that amounts to a risk - a reason for inflation to remain high as households spend rising incomes - or a positive surprise that needs to be nurtured with patience about future rate moves. So far, this has occurred without major disruption in the job market, which sports a still-low unemployment rate of 3.6% and is spinning out new jobs and wage growth at rates higher than before the pandemic.
The drop in import prices is important to Fed hopes that out-and-out declines in goods prices, which soared during the coronavirus pandemic, could offset service-sector inflation that has typically been higher and "stickier," even before the pandemic. The producer price index, in particular, suggests consumer inflation could keep slowing.
Beyond the softened pace of consumer price increases in June, reports on import prices and producers' input costs were both weaker than expected.
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