In the continued debate over inflation/deflation, there are some who believe the US will only experience worrisome price inflation if there is corresponding wage inflation where employees ask for raises, companies grant them and continue to raise prices to offset it. With plenty of slack in the labor market, wage inflation is very unlikely but it’s wrong to think that is reason not to worry. Commodity prices are unquestionably going up and the prices we pay for many important items are moving up too, especially food and energy. The worst thing therefore from the perspective of the average person is NOT to have wage inflation to offset the rise in prices. Without it, it’s the ultimate middle class squeeze. Also, WE DO HAVE WAGE INFLATION, imported from China where wages are rising across the board for employees that make many of the things we buy.

Category: MacroNotes

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

5 Responses to “We don’t need US wage inflation to have a problem”

  1. Topspin says:

    What a dream. US wage inflation. Yeah right. There’s nothing to fear for the middle class because the future is apparent and the only questions are what and how to deal with the reality. The fact is they WILL be squeezed until they take responsibility for the democracy. With small, medium and large companies alike playing to the psychological “belonging” needs of people it is a major rebalancing. Social networking is only a conduit, not a foundation, for this type of determination and self realization.

    Before they can align, organize and get out of their own way to any semblance of prosperity or holding onto a percentage of what remains, a large percentage must come to agreement on what that responsibility is and how it manifests in everyday actions through individual, not collective, demonstration. The tea party symbolizes the beginning of the conversation or identification of the problem yet there are no real answers or follow through ideas yet, mostly just talking and emotional outbursts.

    Government needs to become something people do every day like brush their teeth. The ballot box is simply the last step where things get counted.

  2. franklin411 says:

    Chinese “wage inflation” is the most hopeful sign yet that the Republican plan to destroy America by scrapping out factories and selling them to the Communists will fail. Thank God the Chinese people are refusing to work for a penny a day. They want two cents! Strike! Strike!

  3. ricecake says:

    North Africa is in turmoil. And Egypt. And Albania. Next? India, Indonesia, Vietnam, China is also a possibility. Eventually all that will come back home to the U.S.A. Little people already have not much left. Now they have less and less.

    In the neighborhood, gradually seeing more and more homeless people around. When the local budget cut effective, things will get much worse of course.

    Rubini said the Fed may eventually have to do QE III to bail out states and cities under political pressure. Why not? QEI bailed out the agencies. QEII bailed out bail out the Federal government by by buying back government bonds. QEIII will bail out the heavily indebted states, counties, and cities. Might there be QEIV to bail out the pension funds.

  4. Topspin says:

    @ricecake re: serializing QE…Entirely possible and likely. The only issue is the “sub-naming” of the QE prescription which is political messaging. The fix is in and that will not change. The only issue (which is a non-issue) for the masters of disaster is staying on top of the power paradigm, at least for the foreseeable future.

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