Quick RIC: Hotter for Longer

Research evidence excerpt

Quick RIC: Hotter for Longer

The labor market is resilient Exhibit 6: Youth unemployment has bounced back from highs

US unemployment (%) for ages 20-24 since 1996• Youth unemployment, a key concern in 2025, has been

declining for six months and is at a two-year low (Exhibit 6);

18% US Unemployment (ages 20-24) SA

• Wage growth for job-switchers is averaging 5%. Before the

post-Covid stimulus bubble, this level had not been 15%

sustained since the late 1990s (Exhibit 7);

13%

• Software job postings on Indeed are at their highest since

2023 and have risen consistently over the last two months 10%

(Exhibit 8). Over the last year, job postings in other AI

exposed industries (customer service, finance), are up nearly 8%

10%. As AI enables higher productivity, companies could

boost hiring to expand operations (Jevons paradox).

5%

1996 2001 2006 2011 2016 2021 2026

Source: BofA Global Research, Bloomberg

BofA GLOBAL RESEARCH

Exhibit 7: Job switchers starting to gain more leverage Exhibit 8: Software job postings at highest since 2023

Atlanta Fed wage growth tracker for job switchers (3m average) Indeed job posting index levels, seasonally adjusted

9% 75 125 Job switcher wage growth, 3m avg Software job postings

Overall job postings (rhs)

7%

115 5.0%

3%

1% 60 100

1997 2002 2007 2012 2017 2022 2027 01/2024 08/2024 03/2025 10/2025 05/2026

Source: BofA Global Research, Bloomberg, Atlanta Fed Source: BofA Global Research, Bloomberg

BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

Consumer spending has been insulated from price shocks so far

• BofA internal credit card spending data was up 4.8% YoY in April, a MoM increase of

0.6ppt (see Apr retail sales: steady as she goes).

• BofA Institute data also estimates that payrolls growth strengthened to nearly 2%