Allan Meltzer writes in the Wall St. Journal:
With annual inflation at 2% or more and unit labor costs rising at a 5% rate, loose fed policy risks reviving the latent fears that it is willing to permit higher inflation now to respond to a forecast that unemployment may rise. That returns to the policy that made the Great Inflation costly and durable.
The better policy is to wait until the very mixed data of the moment forms a pattern. High-frequency data is often revised. It often has transitory aberrations that do not persist. Unfortunately, after a major change in underlying conditions, we know even less than usual about the future.
86 hours to go.
Over the last four quarters unit labor cost increases have been:
III 06...2.9%
IV 06....10.3%
I 07.... 5.2%
II 07.....1.4%
So is the year over year gain what we should
pay attention to. If so why should we ignore the
much lower rates so far this year.
Maybe the fourth quarter double digit gain was some sort of fluke we should ignore.
I don't know.