San Francisco Fed warns of possible unemployment spike amid cooling labor data.

Federal Reserve Bank of San Francisco President Mary Daly has indeed warned that the U.S. labor market is approaching an inflection point. She emphasized that further slowing in the labor market could lead to higher unemployment. While the labor market has adjusted slowly so far, Daly cautioned that we are getting closer to a point where this benign outcome may be less likely. Firms may need to adjust not only vacancies but actual jobs, potentially resulting in increased unemployment. Importantly, she highlighted that inflation is not the only risk they face.

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