Bloomberg Surveillance · Friday, August 7, 2026
The recent labor market data, particularly soft wage growth, suggests the economy is not overheating, which could influence the Federal Reserve's approach to interest rates. This softening in wage growth may help to hold down inflation, countering previous concerns about an overheated labor market driving prices up.
“The thing that would get the Fed moving towards rate hikes the fastest. Where if there was any sign of overheated in the labor market, this is exactly the opposite of overheating.”
“We hadn't seen wage growth really picking up, but we really hadn't seen it slowing down much. And so this really takes like the labor market isn't pushing up inflation, and frankly, if it softens it it might help hold down some of that inflation.”