Economic Insights: The Phillips Curve: flatter, kinked but not "dead"
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The Phillips Curve, which says that as the unemployment rate falls, nominal wages will rise, is making a comeback. Many labour markets are beyond full employment and wage inflation is set to rise. It may spike in an overheating risk scenario. Non-life insurers, most notably in casualty lines, can expect increased claims severity. In life, demand for new business may fall.