Chart of the Week: Inflation Predictor Model

Technimentals inflation model has been shifting higher for 2 years, mostly on the heels of escalating energy prices. Most of its commodity components have risen, while retail sales have gone stagnant, as the consumer appears weakened.

Inflation Predictor Model
click for larger chart
Inflation_prediction_1
Source: Technimentals

Average Hourly Earnings, which have increased on a Year-over-year basis, still lags behind “normal” wage growth at this stage of a recovery.

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Employee Compensation

Ever look at the breakdown of employer costs for employee compensation? It is actually quite fascinating. According to today’s BLS release, for June 2004:

· Employer costs for employee compensation averaged $24.96 per hour worked;
· Wages and salaries, which averaged $17.70, accounting for 70.9% of costs;
· Benefits, averaging $7.26, accounted for the remaining 29.1%;
· Costs for *legally required benefits averaged $2.03 per hour 8.1%
&nbsp&nbsp&nbsp(Note that represents the largest non-wage employer cost).
· Life, health, and disability insurance benefits averaged $1.93 (7.7%);
· Paid leave **benefits was $1.66 (6.6%);
· Retirement and savings benefits averaged $1.01 (4.1%).

All of the above is “per hour worked”

*Social Security, Medicare, unemployment insurance, and workers’ compensation

**vacations, holidays, sick leave and other leave

Source:
National Compensation Survey – Compensation Cost Trends

http://www.bls.gov/ncs/ect/home.htm

http://www.bls.gov/news.release/pdf/ecec.pdf

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