Unemployment Still the Problem, Not Inflation

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We had a decent jobs report today, which suggests the economy might be recovering a bit. So does that mean we need to start worrying about inflation? David Leonhardt says no:

The average hourly wage across the economy — including salaried employees — did not grow at all in March. It was $22.87, just as it had been in February. And from January to February, it rose only a single cent.

Over the last year, hourly wages have grown 1.7 percent. That matches the smallest annual increase since the recession began, in late 2007. In the middle of 2009 — when the economy was still shedding hundreds of thousands of jobs a month — the annual increase was significantly larger: about 2.5 percent.

It’s all but impossible to have an inflationary spiral if wages are not rising rapidly.

Businesses are starting to hire at moderately promising rates, but unemployment is still high, and it’s going to stay high unless job growth picks up a lot. And with unemployment high, it’s hard to see how any kind of broad-based inflation can stick. Unemployment is still our big problem, not inflation.

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