“Immaculate disinflation” is the macro theme du jour.

I suppose to employ it is to traffic in clichés. Guilty as charged.

Market participants’ new favorite catchphrase is just another way of saying “hope floats,” even if Chinese spy balloons don’t anymore.

The “immaculate disinflation” premise posits that against the odds, the US economy will experience a sustainable decline in consumer price pressures alongside cooler wage growth despite unprecedented friction in the labor market, which can resolve through the normalization of job openings — so, without mass layoffs.

It’s a popular notion, and one that’s been cited to explain away an otherwise questionable YTD surge in everything from equities to credit to bonds. Goldman’s Kamakshya Trivedi ran with it as the headline in the bank’s FX weekly.

Trivedi noted that the scorching-hot NFP print came in defiance of “catchy headlines about layoffs.” The allusion was, of course, to scores of tech workers who, by some accounts, had new jobs or lucrative contract work lined up pretty much as soon as they were let go by America’s tech giants.

“Compensation costs have continued to slide lower across a range of measures” despite the hot pace of hiring, Goldman wrote, citing their own wage tracker (the first principal component of average hourly earnings for private industry workers, the employment cost index and compensation per hour).

To Trivedi, “the most notable” part of the February FOMC statement was what it didn’t contain. “They removed all the references to what is driving inflation [and] Powell took a somewhat agnostic view and implied that the Fed would not push for tighter conditions if spot wage and inflation data continue to improve”

Of course, both the ECB and the BoE hinted at pauses in their respective hiking campaigns (the ECB following an additional half-point move next month), which should help offset some of the ongoing pressure on the dollar. The greenback came into last week hobbled by the Fed’s smaller hike increments, recession speculation in the US and the perception that global growth outcomes are likely to be better than feared.

Goldman’s Trivedi cited the “broadly pro-cyclical environment” in describing a still “negative macro mix for the dollar,” and, notably, suggested last week’s data would’ve been more positive for the greenback “if the Fed were more closely relying on the Phillips Curve to dictate policy.”

The bottom line, though, is that “the US is (still) hardly in recessionary territory,” Trivedi remarked, saying there’s “still a risk that the cycle needs to be extended.”

As I mentioned Friday, you could make the case that last week’s data played along with the “immaculate disinflation” narrative even as the headline NFP print (and the JOLTS headline) suggested employers remain desperate. Pay growth and unit labor costs both receded in Q4, after all.

But employer desperation for labor isn’t lost on workers, whose pay still isn’t keeping up with inflation.

Between higher pay and slowly receding consumer price pressures, the rate of wage and salary growth moved closer to positive territory in Q4, but… well, close only counts in horseshoes and hand grenades.

For all the talk (“catchy headlines,” to quote Trivedi) about the return of labor as an economic actor with clout, union membership has never been lower.

“The union membership rate — the percent of wage and salary workers who were members of unions — was 10.1% in 2022, down from 10.3% in 2021,” the BLS said last month. That was the lowest in comparable data going back to 1981, when the rate was 20.1%.