As the economy recovers from the COVID-19 pandemic, many labor market measures—including the KC Fed LMCI—suggest the labor market has tightened (Glover, Mustre-del-Río, and Pollard 2021). In a tight labor market, the number of job openings is high relative to the number of job seekers; as a result, workers may be able to find jobs more easily and are likely to receive higher wages. However, firms may have a harder time filling positions in a tight market and may incur higher labor costs, thereby inducing a “wage-price spiral” in which higher wages lead firms to increase prices on goods and services, which, in turn, lead workers to negotiate higher wages. Although this spiral suggests labor markets can become “too tight,” economists debate when exactly labor markets become sufficiently tight to risk driving up inflation.