“We’re a little higher than 2% inflation,” Cohn said. “We’re very close to 3% but on the other hand, we’re seeing unemployment rates pick up more progressively than people would like to see. So the Fed trying to figure out how to fix both of these is making a decision to fix the unemployment picture more than they’re picking fixing the inflation picture. I’m not disagreeing with that.”
He believes that the current state of the jobs market is a result of what happened to it during the COVID-19 pandemic.
“I think the unemployment picture is a natural evolution of where we’ve come from in COVID,” he said. “When we left COVID, we were in a very tight employment market. I’ll speak with my industry hat on. We, as an industry, were hoarding talent. Everyone was afraid of where they’d get their next incremental worker. So you were incentivized to hold on to every incremental worker you had because you could not get them back.”
In the post-pandemic world, costs have increased as inflation has gone up. Cohn said many companies are accounting for this price increase by reducing labor costs.
“Now we’re in a period of time where your input costs have gone up, especially on goods,” he said. “You can blame that on tariffs. Your inability to price finished goods down to the consumer, because the political pressure is high. So if you’ve got input goods price pressure, and you’ve got no ability to price your final goods. Something has to go in the middle. And what we’ve seen go is labor costs being pushed out.
