Yellen Job-Slack View Muddied by Pent-Up Wage Deflation

Federal Reserve Chair Janet Yellen is raising questions about her own argument that stagnant wages mean the U.S. is far from full employment, armed with research from the Fed Bank of San Francisco that she used to head.

Yellen, speaking at the Fed’s annual symposium in Jackson Hole, Wyoming, last week, again cited low wage growth as evidence that the labor market is weaker than the 6.2 percent unemployment rate suggests and that interest rates should therefore stay low. And then she proceeded to cite reasons to be wary of that proposition.