Ten Years Ago at Grasping Reality: June 21, 2017

Must-Read: Nick Bunker: Is the Fed being misguided by the Phillips curve?: "Looking at the prime-age employment rate, the labor market might have a bit more tightening to do before wage growth is going to pick up significantly... http://equitablegrowth.org/equitablog/value-added/is-the-fed-being-misguided-by-the-phillips-curve/

...But if and when significantly higher wage growth does arrive, will it necessarily translate into higher inflation? That would require a strong passthrough of wage growth into higher inflation. But perhaps the recent increase in the share of income going to labor as the U.S. economy recovers indicates that companies are more willing to cut into their own share of income before hiking prices. Certainly, the relationship between wage growth and inflation today is quite flat....

Cardiff Garcia points out at FT Alphaville that the members of the Federal Open Market Committee have continuously underestimated how low the U.S. unemployment rate can go. Perhaps inflation will pick up once the effects of nearly 4 percent unemployment are felt, but if unemployment can go lower, then underestimating inflation again will result in fewer people with jobs and lower wage growth for those with them. That would be an unfortunate miscalculation based on perhaps misguided reliance on the Philips curve...

Is the Fed being misguided by the Phillips curve Equitable Growth

Is the Fed being misguided by the Phillips curve Equitable Growth