Selected indicators of labor market tightness during 3 recent episodes

1999–2000 2006–2007 2018–2019
Unemployment 4.1% 4.6% 3.8%
ECI hourly pay, % change 1.7% 0.6% 1.0%
Productivity growth 3.6% 1.4% 1.6%
Productivity – pay 1.8% 0.8% 0.6%
Inflation, core PCE 1.5% 2.2% 1.8%
Inflation acceleration 0.1% 0.1% 0.2%
Labor share of corporate income 81.7% 76.7% 76.7%
2-year change labor share 2.7% 3.7% 1.0%
CBO output gap 1.0% 0.8% 1.0%

Source: Author’s calculations. Unemployment, hourly pay, productivity, inflation and the labor share are all calculated as 2-year averages. Inflation change and the labor share change are calculated as a change between the last quarter in the period to the same quarter a year before. The measure of hourly pay is the Employment Cost Index (ECI), total compensation, all civilian employees. To better-align it with the measure of productivity (the real output per hour measure from the nonfarm business sector productivity series), nominal ECI is deflated with the gross domestic product (GDP) price deflator.

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