U.S.: Higher Wages Give Consumers Money To Burn

But ever-tighter labor markets may start to squeeze profit margins

A week before the July 29 report on labor costs, Federal Reserve Chairman Alan Greenspan told Congress: "Increases in the employment cost index still trail behind what previous relationships to tight labor markets would have suggested." Well, after the latest report, that's still true. For now, the bottom lines of businesses and households are all the better for it, but the future still demands caution.

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