Some Trends in Real Wages

An argument increasingly being made is that inflation is being built into wage demands in a context of really tight labor markets, and this would induce a wage-price spiral. This outcome is plausible, but I think it’s useful to compare wages against CPI to see if wages are really abnormally high, and are starting to rise in tandem with inflation. [text corrected 8/13]

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Inflation Expectations of Consumers

A lot of coverage of how the NY Fed’s survey of consumers’ inflation expectations had moved substantially (e.g. NYT). A couple of observations: (1) household/consumer based expectations are upwardly biased; (2) the high inflation is expected to be temporary, in the sense that the expected inflation in the next 12 months is higher than 12 month inflation ending in June 2024.

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