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?

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?