February’s disappointing jobs report was the result of exhaustion of parts of the labor pool and consumer resistance to paying for higher labor costs.

US payroll employment grew by just 20,000 in February, against a market consensus forecast of 170,000 growth. Administration officials pointed to the 3.4% growth in average hourly earnings as a sign of economic health, but low employment growth and higher wages are twin images of the same picture. US employment growth has been concentrated in labor-intensive, low wage sectors, and that is where hourly earnings have risen the fastest.

Higher wages are NOT leading to inflation,

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