Sunday, September 23, 2012

"This mathematical deception is guaranteed to make labor costs look as if they are increasing on a path similar to inflation."

I said it, but I didn't show you. So, here it is:

Similarity: Unit Labor Cost and the Implicit Price Deflator
(Click graph for the FRED source page)

The Unit Labor Cost series: Suspiciously similar to the Price Deflator, don't you think?


Jerry said...

I think all this shows is that wages and benefits were almost keeping up with inflation.

Do they really try to say this is the cause of the inflation? If the total amount of money i spend on bread and beer goes up with inflation, does that mean that my buying bread and beer causes inflation?

(It seems to me like it just means that inflation exists - i.e., all of the prices go up.)

The Arthurian said...

"Do they really try to say this is the cause of the inflation?"

Well Jerr, you tell me. Maybe I rounded to the next higher exaggeration.

First I knew of "unit labor cost" was reported in mine of 11 September. In that post I quoted
"Economists view increases in unit labor costs as an important indicator of potential inflation."

Is "an important indicator of potential inflation" the same as "the cause of the inflation?" Eh, maybe I rounded it up a little.

I still bristle at the explanation given in the 1970s, that it was not "cost-push" but "wage-push" inflation.