The Atlanta Fed's macroblog provides commentary and analysis on economic topics including monetary policy, macroeconomic developments, inflation, labor economics, and financial issues.

Authors for macroblog are Dave Altig, John Robertson, and other Atlanta Fed economists and researchers.

« Is The Labor Market Still Underperforming? | Main | The Market Solution To The Energy Question... »

February 04, 2006

Jumping The Inflation Gun

In the clouds around the silver lining department, the reported downside of yesterday's otherwise pleasing employment report was the relatively strong wage growth in January, a development that presumably brings with it renewed fears of inflation. That story is covered by the Capital Spectator, and by Barry Ritholtz, but here is the basic idea, from MarketWatch:

[Al Goldman, chief market strategist at AG Edwards] said a tight labor market worries the central bank as companies have to offer higher salaries to attract workers, which leads to wage inflation: "And the Fed is in business for one reason only, and that is to try and control inflation."

I highly recommend Tim Duy's take on this, posted at Economist's View. Here are my own words of warning:  It is unit labor costs -- labor compensation adjusted for productivity growth -- that reflect the measure of labor payments important for detemining price-level growth.  Better to not jump to conclusions until we actually see the data that matters.

February 4, 2006 in Data Releases , Inflation , Labor Markets | Permalink


TrackBack URL for this entry:

Listed below are links to blogs that reference Jumping The Inflation Gun :

» Tripe from the Economists! from Mover Mike
I have continued to read tripe from the economists out there. This one from Macroblog called Jumping the Inflation Gun. In the clouds around the silv... [Read More]

Tracked on Feb 4, 2006 1:07:04 PM


Post a comment

Comments are moderated and will not appear until the moderator has approved them.

If you have a TypeKey or TypePad account, please Sign in

Google Search

Recent Posts



Powered by TypePad