US Rates Strategy DailyDéjà V/U Revisited

Key arguments

• Labor demand bottomed in late 2025 and rebounded markedly in 2026, while wage growth decelerated linearly, indicating a softening job market.
• Early indications suggest the gap between labor demand and wage growth may be closing, with wage growth better aligning with labor demand.
• The Atlanta Fed's median wage growth series reaccelerated to 4.1% y/y in August.
• If this pattern becomes broadly evident across other wage measures, a key source of economy-wide disinflationary pressure would be removed from the Fed's rate-setting calculus.

Corresponding source evidence

1. Labor demand — proxied by the ratio of job openings to unemployed workers — hit a hard bottom in late 2025 before rebounding markedly this year, while estimates of wage growth continued to decelerate linearly, which generally indicates a softening job market. · 2025
2. Early indications, however, suggest this gap may be closing with wage growth better aligning with labor demand (shown below), as the Atlanta Fed’s median wage growth series has reaccelerated to 4.1% y/y (August).
3. Should this pattern become more broadly evident across other wage measures, a key source of economy-wide disinflationary pressure would be removed from t he Fed’s rate -setting calculus.