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For anyone who is interested, I wrote up my take on the Q2 employment cost index: macromostly.substack.com/p/a-brief-no...

A Brief Note on the Employment Cost Index (ECI)Non-Wage Benefit Costs Are Becoming More of a Problem, With Health Insurance as a Key Culpritmacromostly.substack.com

Not that this is a good idea, but if you were a central banker who REALLY wanted to extract pure signals about the world out of market price movements, you’d want a very explicit and comprehensive reaction function that you stuck to doggedly

Not a politics guy and I'm not sure my assessment of major legislative activity on health insurance is correct (did I omit anything?), but I don't think it's a coincidence that both Clintoncare (failed) and Obamacare (successful) happened after periods of elevated cost growth

1/ Some not-great news from the Q2 2026 employment cost index (ECI), for both the Fed and for workers. For the first time in a while, non-wage benefit costs are outgrowing wages. For the Fed that means wage data understate labor-induced inflationary pressures...

The ADP data lags initial claims by 2 weeks (and is a 4 week average, so the lag is actually bigger). It's worth chewing on what this indicator will soon look like if initial claims are correct! (Non-trivial "if")

for tomorrow's ECI release, I'll be looking closely at the grey line - are wages starting to understate labor cost pressures? (Alternatively: is faster benefit cost growth eating away at wage growth?)

If the following story makes sense to you I strongly recommend cleaning up your information environment (Screenshot from the other site)

Red shouldered hawk not having any of this

My friend @chipcutter.bsky.social has a great article on the 2026 change in hiring sentiment at big companies. But everyone should curb their enthusiasm. Hiring has increased by a measly 1% in the first 5 months of '26 relative to the 2nd half of '25... www.wsj.com/business/big...

Big Companies Are Starting to Hire Again, Defying Predictions of AI WipeoutAfter a year of holding back on new hires, companies from tech and transportation to defense now say they need more people to work alongside AI.www.wsj.com

Indeed job postings: 1/ Overall postings are flat; not rising, not falling. On a year-over-year basis they're still down a little but we'll cross the X axis in the next few months.

Claims: 1/ I thought last week's initial claims number (188K) was a freakish fluke. This week: 197K, a little higher but still very low... increases the odds that we've seen a further small decline in layoffs. (Let's give it a few more weeks before big pronouncements.)

Neither the Lucas Critique nor Goodhart’s Law apply to policymakers’ choice of a specific broad based inflation metric :/

As the famous central banker Leon Trotsky once said, “you may not be interested in forward guidance, but forward guidance is interested in YOU.”

In the absence of official forward guidance, unofficial forward guidance (like 3 dissents in favor of a hike) fills in some of the gap

It's common to talk about the "frozen labor market" due to the low hire / low fire dynamic. BUT The labor market is hotter than pre-pandemic in one important dimension - more job gains and losses are happening via business openings/closures (and births/deaths).

A great preview of tomorrow's FOMC decision courtesy of my Access/Macro colleague Tim Mahedy accessmacro.substack.com/p/dont-expec...

Don't Expect a July Fed Hike, but Simmering Frustrations May Become More ApparentA July hike is unlikely, but battle lines within the Committee are likely to become clearer as members look to backdoor forward guidance through economic assessments.accessmacro.substack.com

I know it's conventional wisdom that easy monetary policy worsens wealth inequality but the opposite seems to be the case

Private sector employment growth as measured by ADP is still OK (+60K the last 4 weeks; probably enough to keep the unemployment rate from rising) but the slowest it's been since late March

I’m not a serious Fed guy but I’d be pretty surprised if they hike tmw

The data from Morning Consult remains blah... unemployment rate index slightly above year-ago levels. Based on most of the data we've gotten in July (from this and other sources), I expect next week's job report to also look blah (just like June's).