Don’t look now, but US labor costs just decelerated again, where “again” means that for a second consecutive quarter, the cost of employees rose at the slowest pace in more than four years.

The BLS on Tuesday released the Employment Cost Index covering Q4. Before you click away fearing the tedium of esoteric datasets, recall that for a year or so, ECI was among the most important macro releases on planet Earth.

I’m not exaggerating. It was upward pressure on the quarterly, headline ECI prints which motivated Jerome Powell’s initial hawkish pivot in late 2021 which culminated in the jettisoning of “transitory” as a description for what would go down as the worst bout of US inflation since the 1970s.

For the next year — i.e., for all of 2022, a period defined by the most aggressive rate-hiking campaign since “Tall Paul” was running the show — Fed officials eyed every ECI release warily.

Fast forward to the end of 2025 and the headline showed a 0.7485% quarterly gain. That’s the slowest since early 2021, when inflation took off in earnest in the US.

The figure’s a reminder: This series ticked a high of 1.33% in Q2 of 2022 when CPI peaked around 9%.

The ongoing deescalation in this data should dispense with any lingering concerns about a wage-price spiral in the US. There are plenty of reasons to suspect inflation might return, but that isn’t one of them.

The same release showed the annual pace of wage gains specifically for private sector employees — a metric preferred by some economists — ticked back down to the lowest since early 2021.

There again you see pay growth finally retracing the inflation-era surge.

If you’re a dove on the FOMC, this is good news, and it’s an(other) excuse to push for the rate cuts Donald Trump wants. Slower pay growth constitutes more evidence to support the contention that the labor market’s softening and in no way represents an upside risk to inflation.

When you throw in the distinct possibility that automation across the services sector will put downward pressure on unit labor costs — and, less politely, drive a white collar jobs apocalypse — you have a mostly apolitical argument for the idea that rates can safely be lowered by the 50bps the market expects in 2026.

As for the negative policy rates Trump wants, I reckon that’s still a tall order, even for a beholden Fed chair.