Spotlight on labor’s finances and muted inflation

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Spotlight on labor’s finances and muted inflation

By Blu Putnam, Chief Economist & Erik Norland, Senior Economist, CME Group

Inflation Conundrum

  • US inflation rate has hovered at around 2% since 1994.
  • Massive quantitative easing since 2008 has failed to stoke inflation.
  • Traditional premium in Treasuries over inflation rate has evaporated.
  • Could quantitative easing during pandemic raise inflationary pressure?
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Total Labor Income and the State of the US Employment Market

  • Total labor income is down 0.6% year on year before inflation in October.
  • Decline compares with 4-5% growth annually during economic expansion.
  • Total labor income offers snapshot of consumer finances without fiscal support.
  • Can Congress strike a meaningful relief package deal in lame duck session?
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