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Better News on Wages

Our conclusion that the November uptick in wages was a temporary detour from wage disinflation was vindicated on two counts.  First, the monthly increase was revised down from 0.6% to 0.4% (see Chart 1).  That meant that the percentage comparison…

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Wage Hysteria

Knee-jerk reactions based on one data point are becoming routine.  The latest example is November average hourly earnings (AHE), which resulted in several negative comments that wages were out of control which would result in aggressive Fed tightening.  For the…

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Wage Inflation Has Peaked

Employment Cost Index (ECI) for the third quarter reveals that wage inflation peaked in the second quarter, confirming our earlier observation that wages as measured by monthly data for Average Hourly Earnings (AHE) had probably peaked (see Chart 1). We…

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Inflation Hysteria Redux

Inflation hysteria is back.  The better than expected July CPI (no change from June) led to expectations that August would decline since it was already known that gasoline prices had declined.  Gasoline prices did drop but the CPI increased by…

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Peak Inflation?

There has been a radical shift regarding inflation and the Fed.  Prior emphasis on core inflation (CPI or PCE) has increasingly shifted to the CPI for all items.  Part of the explanation is that there was no change in the…

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