UBS On-Air: Paul Donovan Daily Audio 'A different relationship from normal'

The US employment report presents a complicated relationship between labor markets and consumer price inflation (and thus US Federal Reserve policy). Normally central banks want to lower wages to lower wage costs to lower inflation. With average earnings catastrophically negative, this is not today’s inflation story. Instead, central banks need to subdue demand to weaken pricing power and profit margins. Demand can slow with weaker earnings, weaker employment, or rising fears around job security.