The lack of any correlation between the tightening labor market and inflation in 2017 suggests that the Phillips curve is not true. "Deflationary competitive pressures could have become more important for the overall trend in prices than the so-called Phillips Curve relationship, which links inflation to the state of the labor market. That model, coined almost 60 years ago, is the basis for the Fed’s outlook for continued gradual rate increases."<ref>https://www.bloomberg.com/news/articles/2017-06-20/amazon-has-at-least-one-fed-official-rethinking-inflation-theory</ref> Wage growth is a necessary component of inflation, and without wage growth a drop in unemployment seems insignificant in predicting inflation. | The lack of any correlation between the tightening labor market and inflation in 2017 suggests that the Phillips curve is not true. "Deflationary competitive pressures could have become more important for the overall trend in prices than the so-called Phillips Curve relationship, which links inflation to the state of the labor market. That model, coined almost 60 years ago, is the basis for the Fed’s outlook for continued gradual rate increases."<ref>https://www.bloomberg.com/news/articles/2017-06-20/amazon-has-at-least-one-fed-official-rethinking-inflation-theory</ref> Wage growth is a necessary component of inflation, and without wage growth a drop in unemployment seems insignificant in predicting inflation. |