U.S. inflation numbers continue to come in nicely, but the data on wages still suggest that the recent disinflation should eventually reverse even without new supply shocks.
Two sides to this argument. One could argue that wages are a lagging indicator and that current wage increases are reflective of past inflation. There is another side though and wage growth does mirror recent interest rate increases in the intermediate to longer term tenors in the treasury market and recent rises in commodity prices. Possibly we're experiencing the end of the post GFC "savings surplus" and the onset of above trend (since the GFC) growth on the demand side. We shall see.
I can imagine that wages are somewhat lagging, although wage growth has been remarkably stable over the past year despite a substantial slowdown in price growth. I do like the idea that we are finally shedding the legacy of maldistributed income+underconsumption+underinvestment that characterized so much of the past few decades, but I agree that it is too early to tell just year.
When you mention American Consumer de-levering, what're the primary sources of American Consumer leverage (not counting mortgage, I assume)? Credit cards?
Student loans ($1.8 trillion), motor vehicle loans ($1.5 trillion), and credit cards ($1.3 trillion) make up the bulk of non-mortgage credit ($5 trillion). The rest are things like miscellaneous "personal loans". Details are in here:
Two sides to this argument. One could argue that wages are a lagging indicator and that current wage increases are reflective of past inflation. There is another side though and wage growth does mirror recent interest rate increases in the intermediate to longer term tenors in the treasury market and recent rises in commodity prices. Possibly we're experiencing the end of the post GFC "savings surplus" and the onset of above trend (since the GFC) growth on the demand side. We shall see.
I can imagine that wages are somewhat lagging, although wage growth has been remarkably stable over the past year despite a substantial slowdown in price growth. I do like the idea that we are finally shedding the legacy of maldistributed income+underconsumption+underinvestment that characterized so much of the past few decades, but I agree that it is too early to tell just year.
When you mention American Consumer de-levering, what're the primary sources of American Consumer leverage (not counting mortgage, I assume)? Credit cards?
Student loans ($1.8 trillion), motor vehicle loans ($1.5 trillion), and credit cards ($1.3 trillion) make up the bulk of non-mortgage credit ($5 trillion). The rest are things like miscellaneous "personal loans". Details are in here:
https://www.federalreserve.gov/releases/g19/current/default.htm