Prof G Markets · Wednesday, July 15, 2026
Mark Zandi believes that a soft labor market, characterized by slow job creation and increasing slack, is putting downward pressure on wages and should eventually lower inflation. However, he cautioned that this is a gradual process that could take one to three years.
“I think we're directionally lower. Again, assuming that, you know, the Iran war doesn't go off the rails here and oil prices stay where they roughly were, let's say 80, 85 bucks a barrel.”
“Then I do think we will see it come in because the other thing that to consider on inflation that is really fundamental is is the job market, you know, that that goes to wages and cost of labor, and that is the single most important driving force of inflation.”
“And right now, the labor market is soft, you know, we saw that in the last jobs report, we're not creating a whole lot of jobs, and there's slack in the labor market that's continuing to increase, that's putting downward pressure on wages.”
“Wage growth is below the rate of inflation and slowing across all different wage groups.”
“And that, you know, should ultimately drive the rate of inflation lower. But again, that's a process, that takes time. That doesn't happen in a month or two or three, that happens in a year or two or three.”