Another factor that I will be watching closely is longer-term inflation expectations, which I believe significantly influence inflation. As inflation moved higher over the past year and a half, measures of short-term inflation expectations moved up notably, but measures of longer-term expectations rose only a little and generally stand near levels seen in the years before the pandemic, when inflation was low.
Manufacturing is one sector in which firms have implemented new production technologies and are in need of STEM workers. The Philadelphia Fed’s April Business Outlook Survey of manufacturers included a special question about the factors influencing their decisions to remain in the region. Respondents identified the availability of skilled labor as the most important factor.