The first quarter's employment cost index reflected the ongoing softening in the labor market. Labor costs advanced 0.9% in Q1, bringing the year-over-rate down to nearly a four-year low of 3.6%. While concern about inflation has picked up amid dramatic changes to trade policy, inflationary pressures from the labor market continue to subside. {chart} Labor compensation growth continues to moderate. The employment cost index (ECI), the Federal Reserve's preferred measure of employment costs, rose 0.9% in the first quarter, in-line with expectations. Although the quarterly run rate is still hotter than pre-pandemic ... (full story)