Too Much Reliance On Oil And The State Pressures Are Up, But Inflation Won't Soar

If history is a guide, the U.S. inflation outlook has reached a crossroads. The economy is thriving, fueling rapid job growth. Unemployment is down to levels that usually signal tight labor markets and bigger pay increases. And because cyclical gains in service productivity have about played out, unit labor costs in that key sector are rising faster, squeezing profit margins and fueling companies' desire to raise prices. Typically, the economy would be set to bounce down the bumpy road to higher inflation.

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