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📰 U.S. LABOR COSTS SEEN AS TOO HOT FOR INFLATION TO STAY ON TARGET The cost of labor in the U.S. will need to cool down before the Fed is able to keep inflation at its 2% target, Capital Economics Paul Ashworth says in a note. Unit labor costs rose 1.9% in the 3Q and the 2Q figure was revised to 2.4%. “ULC growth is the single biggest determinant of labour-intensive core services prices,” Ashworth says. “In other words, unless ULC growth slows again, it will be a lot harder for Fed officials to claim that inflation can be sustained at 2%.”

November 7, 2024
Frank

U.S. LABOR COSTS SEEN AS TOO HOT FOR INFLATION TO STAY ON TARGET

The cost of labor in the U.S. will need to cool down before the Fed is able to keep inflation at its 2% target, Capital Economics Paul Ashworth says in a note. Unit labor costs rose 1.9% in the 3Q and the 2Q figure was revised to 2.4%. “ULC growth is the single biggest determinant of labour-intensive core services prices,” Ashworth says. “In other words, unless ULC growth slows again, it will be a lot harder for Fed officials to claim that inflation can be sustained at 2%.”