Demand and supply
Thinking a lot about demand and supply in the context of growth, inflation, output, and employment.
Whilst our labour market might be a little too hot, it is also clear that the strength is pro-cyclically drawing in additional supply.
Labour force, by size…
…and by participation rate is well above pre-pandemic levels.
This is good news and helps suggest, in Australia at least, that inflation is a function of excessive aggregate demand rather than supply-side pressures.
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