Tuesday, August 9, 2022

Unit Labor Costs Rising Fastest In 40 Years

 Unit labor costs are now rising at the fastest pace in 40 years, and are even outpacing headline inflation - see chart below.  This reading is caused by lower productivity (-4.6%) as well as higher wages (+5.7%) - a one-two punch that is really bad news for inflation prospects.

Once again: whoever thinks the Fed can afford to slow down its tightening is simply whistling past the graveyard.

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