Payden & Rygel: Jeffrey Cleveland on US employment, retail sales and inflation

11 februari 2026

Inflatie Verenigde Staten Arbeidsmarkt

Jeffrey Cleveland, Chief Economist, Payden & Rygel, shares his views on US employment, retail sales and inflation.

US Retail sales for December were flat compared to November. The employment cost index – which tracks how employers’ labor costs change over time – rose less than expected in the fourth quarter of 2025. How do you interpret this?

'A lot of people are paying attention to retail sales this morning, but we’re looking at the employment cost index because that tends to filter into a view on inflation via, you know, wage pressures that filter into all sorts of things, but, in particular, services inflation. And this is the softest
reading on my chart since 2021.'

That was the second year of the pandemic when a lot was going on with wages and inflation.

'Correct. Before the inflation eruption. So I think this is important. When a central bank is looking to see what they might do next, I think moderating wage pressures and moderating inflation pressures will be key to that story. And this is a data point in favor of additional rate cuts, in my view.'

It’s still disappointing for workers who aren’t seeing bigger pay increases, isn’t it?

'I would say it’s a flip side, it’s a symptom of a softening labor market. If the labor market were stronger, if we were adding more jobs, if we had a strong demand for labor, we would see more wage growth. And we're seeing the opposite right now. So it is sort of a reflection of a softening of the labor market.'