alt Hacker NewsSure, if labor demand exceeds supply, unemployment will stay close to its natural bottom even in an environment of demand cooling. It's the same mechanism -- the supply/demand curve shifting. First it exhibits as wage increases slowing; then it exhibits as unemployment.
We've seen a lot of the first in 2026 -- wage increases have dropped significantly below the rate of inflation.
> if labor demand exceeds supply, unemployment will stay close to its natural bottom
In the private sector. The public sector (and what I'd call non-discretionary hiring, e.g. in healthcare) makes the response a bit more inelastic.