Wednesday, February 3, 2010

Don't Worry About Inflation... For Now

Commodity driven inflation absolutely can pose major problems, but it is usually wage inflation that feeds into any out-of-control inflation spiral. Thus, keep the following in mind when thinking about whether inflation will be a major issue over the near term horizon.

Marketwatch reports:

The costs of employing a worker in the United States moderated in 2009 to the slowest pace on record, the Labor Department reported Friday.

For the past calendar year, the employment-cost index increased 1.5%, the slowest rate of increase since the government began tracking the data in 1982. This is down from a 2.6% increase in 2008.

Wages increased 1.5% in the past year. Benefit costs rose 1.5%. These are both record lows.

Source: BLS


  1. I think wage inflation is a contrbutor to regular style inflation but is not part of hyperinflation.

  2. Another thought,
    wage pressure, as measured by state employees and unions demanding no pay cuts and pension benefit strains may not show up as wage inflation, but are a central pressure point as well.

  3. Right on, getyourselfconnected. Pretty cheap to employ a guy in Zimbabwe but you need a wheelbarrow of cash to pay him.

    It's a slender reed the feds hang on, this idea that with a lot of slack and high unemployment we could not get high inflation.

  4. boatman says:

    in the largest inflationary period in US in modern times wages were flat (78-82). i was there.

    tomorrows problem is todays opportunity.

    this is gold buying time,find the bottom & pull the trigger.