Latest / The Macro Memo with Fexingo: Daily Conversations on Inflation, GDP, and Federal Reserve Policy
The Sticky Wage Inflation Trap
With August CPI coming in at 334.1 and core measures refusing to budge, the Fed faces a new dilemma: wage growth is outpacing productivity gains, keeping services inflation stubbornly high. Lucas and Luna dissect why nominal GDP growth of 1.5 percent real output masks the underlying pressure on American paychecks, and why the labor market's hidden tightness might force rates higher for longer. We break down the specific mechanics of how sticky wages are locking in inflation expectations, using recent JOLTS data and average hourly earnings to explain what this means for your wallet and…
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