Image Source: PixabayOn MarketPlace with Justin Ho, yesterday. I remarked that wage growth (on a 12-month basis) still outstripping inflation.
Figure 1: Year-on-Year growth rate of average hourly earnings for private sector production and nonsupervisory workers adjusted by CPI (blue), leisure and hospitality services (tan), median hourly earnings of all workers (green). Source: BLS, Atlanta Fed Wage Growth Tracker, and author’s calculations.So, over the past year, wages are rising faster than consumer prices, although that is not true for a shorter horizon of three months. To the extent that wages are important for service prices, and services inflation has been more persistent than goods inflation, should we worry?The October Atlanta Fed Business Inflation Expectations survey measure for unit costs (not quite the same as unit labor costs) over the next 12 months is 2.4%, down from 3.1% in March. The September NY Fed Survey of Consumer Expectations (median) is for 3.7% inflation. So while wage growth is likely to continue, it’s not clear the second round wage-price spiral is going to be a dominant factor.More By This Author:GDP in Q3: Relative To Nowcasts, And Alternative EstimatesStrong GDP Growth And Consumer Spending Does The Confidence Index Say We’re In A Recession?
