With the U.S. labor market likely to bounce back strongly this summer from a surprisingly tepid April showing, the risks of an overheating economy remain on the rise.
“I do think there is a very good chance it [economy] will overheat,” said Jefferies Chief Financial Economist Aneta Markowska on Yahoo Finance Live. “I expect us to reach a roughly 3% unemployment rate by the end of next year.”
As Yahoo Finance’s Brian Cheung explains in the latest edition of Yahoo U, there is no official economic definition for economic overheating. But one oft-cited indicator of overheating is inflation, or rising prices.
To be sure, there are numerous telltale signs of that happening in the economy currently.
The core personal consumption expenditure (PCE) price index increased faster than expected, up 3.1% in April, according to the U.S. Commerce Department. Federal Reserve officials view the index as among the best indicators of pricing pressure in the economy. The Fed…