The Phillips Curve is at best in ill repair, if not just outright broken: bit.ly/1NvIJc8 http://t.co/F1h0p5gxmK—
Jared Bernstein (@econjared) August 24, 2015
It is the same thing every month – anybody seriously interested in financial markets and the global economy are sitting and waiting for the US labour market report to come out even though the numbers are notoriously unstable and unreliable.
Why is that? The simple answer is that it is not because the numbers are important on their own, but because the Federal Reserve seems to think the labor market report is very important.
And that particularly goes for Fed-chair Janet Yellen who doesn’t seem to miss any opportunity to talk about labour market conditions.
The problematic re-emergence of the Phillips curve as a policy indicator
To Janet Yellen changes in inflation seems to be determined by the amount of slack in the US labour market and if labour market conditions tighten then inflation will rise. This of course is essentially an old-school Phillips curve relationship and a relationship where causality…
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Utopia, you are standing in it! 
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