Dollars and Jens
Tuesday, August 01, 2006
Fed watch
At this point, 2:1 on the Fed standing pat next week.

Reports the last couple days suggest unit labor costs advanced at a 312% to 4% rate in the second quarter, though the formal number isn't out yet. This would be more alarming to me if it didn't follow such low numbers in two of the previous three quarters; on a plot, labor spending looks like it's catching up to where, a year or two ago, it might have been expected to be at this point. Still, if we get more numbers like this in coming quarters, it's either going to have to pass through to inflation or it's going to squeeze corporate profits; the stock market should be thrilled about neither, but they have different implications for fed policy.

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