, Columnist
Fed Has Good Reason to Expect Faster Wage Growth
Central bankers' relative confidence that the economy is operating at full employment is not unreasonable.
Wages may soon bust out.
Photographer: Andrew BurtonThis article is for subscribers only.
Federal Reserve officials must think that something soon has to give in this economy. The current equilibrium, characterized by low inflation, low unemployment, low wage growth and high corporate profit margins, isn’t sustainable indefinitely, but they don’t know how or when it will crack.
The July consumer price inflation data did not exactly support the Fed’s position that another interest-rate hike this year and three in 2018 are necessary to keep the economy from overheating. It becomes increasingly difficult to argue that inflation is being held down by transitory factors when each month’s data delivers another new factor.