Some respected economists are talking as if the US economy is in serious inflationary trouble. But the current uptick in price growth is highly likely to be a largely benign consequence of the post-pandemic recovery.
BERKELEY – In the past three years, technological advances have provided about one percentage point of warranted US real wage growth each year – admittedly, only half the rate of earlier times, but still something. Yet, real wages are currently 4% below their warranted value from adding on the underlying fundamental productivity trend to the pre-pandemic real wage Employment Cost Index (ECI) level. Does that sound like a “high-pressure” labor market to you?
BERKELEY – In the past three years, technological advances have provided about one percentage point of warranted US real wage growth each year – admittedly, only half the rate of earlier times, but still something. Yet, real wages are currently 4% below their warranted value from adding on the underlying fundamental productivity trend to the pre-pandemic real wage Employment Cost Index (ECI) level. Does that sound like a “high-pressure” labor market to you?