Economist Mark Zandi fears the tight jobs market may "overheat". In the Beige Book, the word "tight" came up 31 times.
Ahead of the last jobs report, Mark Zandi, chief economist of Moody’s Analytics, offered this amusing comment as noted by ADP: “The job market ended the year strongly. Robust Christmas sales prompted retailers and delivery services to add to their payrolls. The tight labor market will get even tighter, raising the specter that it will overheat.”
Turning the spotlight on the Beige Book Drivel I went back to the report and counted 31 instance of the word 'tight'.
Here is a representative sample:
"Most Districts cited on-going labor market tightness and challenges finding qualified workers across skills and sectors, which, in some instances, was described as constraining growth."
Tight Labor Market Theory
The "tight" labor theory concern is that employees will job hop, demanding higher and higher wages, which in turn will push up inflation forcing the Fed to hike rates more than it wants to.
The principle basis behind the tight labor theory is the falling unemployment rate.
The unemployment rate is so distorted that one might wonder why anyone puts any credence into it at all.