Key Points
While energy components have been a key driver of inflation in recent months, core inflation (which excludes volatile food and energy components) remains concerning for monetary policymakers.
- Labor intensive core non-housing services inflation has been particularly persistent.
- However, average hourly earnings growth has continued to slow over 2026 supporting additional non-housing services disinflation.
Contribution to Core PCE Inflation
Average Hourly Earnings Growth: Total Private
The unemployment rate has fallen to 4.1% from a recent peak of 4.5% in November 2025, though the average duration of unemployment has risen.
- The average duration of unemployment has risen by nearly 7 weeks since reaching its cyclical low in 2023.
Average Weeks Unemployed
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