In the continued debate over inflation/deflation, there are some who believe the US will only experience worrisome price inflation if there is corresponding wage inflation where employees ask for raises, companies grant them and continue to raise prices to offset it. With plenty of slack in the labor market, wage inflation is very unlikely but it’s wrong to think that is reason not to worry. Commodity prices are unquestionably going up and the prices we pay for many important items are moving up too, especially food and energy. The worst thing therefore from the perspective of the average person is NOT to have wage inflation to offset the rise in prices. Without it, it’s the ultimate middle class squeeze. Also, WE DO HAVE WAGE INFLATION, imported from China where wages are rising across the board for employees that make many of the things we buy.
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