Yellen a revolutionary Fed chair. She wants labor to get a fairer share of the fruits of the economy’s productivity
She is forcing the financial markets to rethink assumptions that have dominated economic thinking,arguing that fast-rising wages, viewed for decades as an inflationary red flag and a reason to hike rates, should instead be welcomed, at least for now
Pattern of subdued real wage gains suggests that nominal compensation could rise more quickly without exerting any meaningful upward pressure on inflation
In fact, real wages have been rising less rapidly than productivity growth and what we’ve seen is a shift in the distribution of national income away from labor and toward capital
The Worst Case Scenario For The Bond Market
We’ve seen unemployment come down pretty dramatically, there is some concern that the Fed may be behind the curve on inflation, But what I think the Fed is really watching is the wage inflation number.
We’ve seen unemployment come down pretty dramatically, there is some concern that the Fed may be behind the curve on inflation. So if you look at wage inflation now, Janet Yellen thinks 3-4% is a normal range, so if you start to see that wage inflation pick up, that’s what’s really going to drive up consumer prices very quickly, and the Fed’s going to act quickly