Among last week’s important economic data releases, May’s housing sales, durable goods orders, and personal income and spending reports stood out. The pace of existing home sales fell for the fourth month in a row, as limited supply and rising prices hindered sales. Once again, this week will be packed with updates, including a look into consumer and manufacturer sentiment and the release of the June employment report.

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Today, I’ll take a break from focusing on the labor market to look at a related, but shorter-term issue—shocks versus trends. This topic has current relevance, as well as wider applicability, so it is worth thinking through.

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With the ongoing improvement in the medical news, this will be the last of the regular coronavirus updates. I had hoped it would also be the end of the need to cover the pandemic as a separate topic. But with the potential rise of the delta variant of COVID and the possibility of new outbreaks, that may not be the case. I will be providing updates as needed in the future.

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At the start of 2020, I did a piece on inflation versus wage growth where I looked at a bunch of different indicators. The short version of that post is that, for working people, wage growth had generally been higher than inflation over the preceding five years or so.

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Yesterday I appeared on Fox Business’ Mornings with Maria to discuss inflation and the market outlook. Watch the full segment.

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One of the biggest questions for the economy right now is the job market. The headlines are doing a good job covering the immediate issues—labor shortages, wage increases, and so forth. But the more I look at it, there are a couple of implicit assumptions in how we view the job market that need more consideration. For example, much of the analysis has taken what is going on now as something that is happening without any warning and for no apparent reason. But is that really the case?

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