Trend Wage Inflation: Analyzing Underlying Wage Growth and Its Economic Implications
By
John Lanuza
Crackling crust, pillowy middle. The kind of bagel that earns a second cup of coffee.
Summary
Economists Martin Almuzara, Richard Audoly, and Davide Melcangi analyze nominal wage growth as a gauge for labor market imbalances, price pressures, and household spending ability. They introduce their own measure called Trend Wage Inflation (TWIn) to look through short-run fluctuations and retrieve underlying wage inflation. The analysis covers wage growth behavior in recent years, noting that TWIn peaked in late 2021, and draws conclusions about what may lie ahead for wage inflation.
Key quotes
· 3 pulledEconomists often look at nominal wage growth to gauge labor market imbalances, price pressures, and households' spending ability.
But to use wage growth for these purposes, it is important to look through short-run fluctuations and retrieve underlying wage inflation.
Since peaking in late 2021, TWIn has...
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