U.S. Bond Strategy

March 14, 2022

Former Treasury Secretary Larry Summers recently rang the alarm bell on labor market tightness and the potential for wage growth to accelerate further. He argued that the Fed is far behind the curve, a view shared by the consensus. Could a partial reversal of the “Great Resignation” ease labor market conditions and dampen the need for aggressive policy tightening? In this report, we review Summers’ results, highlight where he is overly pessimistic, and present alternative projections for the labor force and wage growth.