The question on everyone's mind is what will it take to lower inflation and how long will it last? Economist fear once wages start to reflect faster price growth it will become a spiral, with higher wages bidding up prices further. The New York Fed surveys individuals on what their wage expectations are for the next year. Their results show that Americans are expecting bigger raises than pervious years. The median point estimate is 3% growth, even among workers over 60 who normally experience slower wage growth. Faster wage growth is normally good for households, but if it feeds into higher inflation, it will be harder to break and may mean lower real earnings.
Source: New York Fed
Allison Schrager is a senior fellow at the Manhattan Institute. Follow her on Twitter here.
Interested in real economic insights? Want to stay ahead of the competition? Every Wednesday, e21 delivers a short email that includes e21 exclusive commentary and the latest market news and updates from around the Web. Sign up for the e21 Weekly eBrief.
Photo by agrobacter/iStock