[Steve_American]

FRBSF Economic Letter, How Much Do Labor Costs Drive Inflation?
May 30, 2023
Research from the Federal Reserve Bank of San Francisco, May 30, 2023

From the FRESF report

Tight labor markets have raised concerns about the role of labor costs in persistently high inflation readings. Policymakers are paying particular attention to nonhousing services inflation, which is considered most closely linked to wages. Analysis shows that higher labor costs are passed along to customers in the form of higher nonhousing services prices, however the effect on overall inflation is very small. Labor-cost growth has no meaningful effect on goods or housing services inflation.. Overall-r-cost growth is responsible for only about 0.1 percentage point of recent core PCE inflation.

So again, the FRBSF has put out its report that increased labor costs have increased inflation by 0.1 percentage points of the IIRC over 5% inflation. This is 1/50-th of 5% (=0.005=0.5%).
. . So, why is the Fed still increasing interest rates?
. . . Is it to help the Repuds win in 2024? Maybe.
. . . Is it to help big bankers make more money? Maybe.
. . . Or, is it because they believe in a false theory that among other flaws, says that looking at reality will only confuse you.
. . . What is your idea for why?

From the linked blog by Prof. Mitchell. This is the standard MMT policy suggestion.

So it was better taking the Japanese route and waiting for the supply side to resolve while at the same time protecting the most disadvantaged households from the temporary cost-of-living stress with fiscal injections.

https://www.frbsf.org/wp-content/upload ... 023-13.pdf

https://billmitchell.org/blog/?p=60875#comment-129315

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