https://www.nytimes.com/2022/01/28/business/pce-inflation-fe…
**Wages Rise at Fastest Pace Since 2002 as Inflation Continues to Run Hot**
**Inflation is rapid and wages are growing at the fastest pace in two decades, trends that may prod the Federal Reserve to lift rates several times this year.**
**By Jeanna Smialek, The New York Times, Jan. 28, 2022**
**Inflation came in strong and wage growth remained elevated at the end of 2021, setting the stage for a challenging economic year in which the Federal Reserve and White House will try to maintain momentum in the job market while wrestling price gains under control.**
**...**
**While robust wage growth is good news for workers, it also increases the risk of sustained high inflation: Companies may raise prices to try to cover rising labor costs...The Employment Cost Index, a measure of pay and benefits climbed 4 percent in the year through the fourth quarter, with its wages and salaries measure picking up by 4.5 percent....The downside is that inflation is eating away at all of these nominal gains....** [end quote]
Wage-push inflation is familiar to anyone who lived through the 1970s. It’s a spiral of higher wages leading to higher prices that cause workers to demand higher wages to keep up with the prices.
Today’s high reading is yet another pressure on the Federal Reserve to withdraw the emergency monetary pumping the used during the Covid crisis. Interest rates will rise, which will hurt the value of bonds and tech stocks (especially those with no profits or dividends).
Wendy