Goldman Sachs believes the US labor market remains in a state of supply-demand balance: the slack tracker, comprised of ten employment indicators, is about one percentage point higher than in the latter part of the last economic cycle; wage growth is also lower than its estimated level, matching the 2% inflation rate.
The latest official data provides similar signals. The US unemployment rate remained at 4.1% in August, while average hourly earnings rose 3.1% year-on-year; although new jobs rebounded to 162,000 that month, the average monthly increase over the past 12 months was only 31,000.
Industrial capacity utilization in July was 76.3%, 3.1 percentage points lower than the long-term average from 1972 to 2025, and manufacturing utilization was also below the long-term average. Therefore, there is currently no widespread overheating with both wages and capacity in short supply.
