Oct

17

Bill McBride published this interesting piece on wage growth in the US.

On the one hand, one might argue that this is a surefire harbinger of inflation. On the other, some wage growth might carry with it some opportunity for increased spending (save? in this country??). Some top line growth would, I'm sure, be appreciated by one and all.

And that assumes that there really is wage growth going on. At best, the jury's still out on that one.

Bill Rafter writes: 

Wage growth has not been underestimated. Payroll tax receipts suggest otherwise. The latter do so some signs of coming back from the grave, but absolutely nothing to get excited about.

Regarding inflation, there are two forms of money growth that have to be monitored: that originated by the Fed known as the Monetary Aggregates, and that originated by the banking system known as fractional reserve lending. The aggregates are the Monetary Base, M2 and MZM. The lending data are commercial and industrial loans. The planned growth of the aggregates is designed to limit deflation. Inflation will not proceed apace until you get a growth in loans. So if you are worried about inflation, at this time all you have to watch is the loan data.

Aggregates and loan data are available on the FRED site. Payroll taxes are on the Treasury site.


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