Is This The End Of Correlation Between Inflation and Unemployment?

Inflation and unemployment are often considered to have an inverse relationship. When employment rates are low, there is competition for workers and wages go up, assuming supply and demand markets are functioning. But with unemployment at 4.1% in November, its lowest rate since 2000 and beyond what the US Federal Reserve officially considers a sustainable long-run rate, inflation “has continued to disappoint,” a Goldman Sachs report noted. What will this mean for Fed rate hikes in 2018? The Goldman report comes as Bank of America Merrill Lynch also noted that the historic relationship between unemployment and interest rates, as measured in the Phillips Curve, might be weakening.

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Inflation and unemployment:...

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