Dollars and Jens
Tuesday, May 02, 2006
personal income and inflation
The what the personal income report breaks out as income to labor rose at a 6.5% rate from Q4 to Q1; with GDP at 4.8%, that suggests a unit labor cost rise of 1.7%. This doesn't seem high enough for concern, especially with some ability for businesses to absorb unit labor cost rises for a while before passing them on to consumers, but GDP growth is almost certainly going to come down significantly from that figure, and I'm not sure personal income is likely to follow suit; unit labor cost increases for the next couple quarters will tend to run a bit higher than that. (The official unit labor cost number comes out in the productivity report, which I believe will be announced Thursday.)

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