Recession Is Lowering The Boom On Wages

These days, there's good inflation news on many fronts: The price of oil has fallen since the war in the Persian Gulf began, and commodity prices generally are at their lowest level since 1987. It's customary, of course, for price pressures to ease during a recession, and now there is evidence of easing on still another front--wages. In the fourth quarter of 1990, hourly compensation grew at a 4% rate, a full percentage point below the 12-month growth rates reported before the recession. And that slowdown has come in spite of continued sharp rises in health care costs. Modest compensation increases and good productivity gains should bring overall consumer price inflation down close to 2% for 1991 when the fourth quarter is measured against a year earlier, predicts economist Maury N. Harris of PaineWebber Inc.

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