Workers' average hourly wages held at $18.53 for a second month. Hourly earnings were 2.7 percent higher than June 2008, the smallest gain since September 2005. Economists surveyed by Bloomberg had forecast a 0.1 percent increase from the prior month and a 2.9 percent gain for the 12-month period.


This piece of data along with first quarter productivity increasing by 1.6% are leading me to another conclusion we should start to consider. Last week Janet Yellen, former Clinton economist and current head of the San Fransisco FED, made a long speech saying she saw no inflation for the next two years. I am beginning to think she is on to something. Wages are up 2.7% in a year, while productivity is up in the 5% range. That means no price pressure from labor. At the same time commodity prices are under control and all the world banks continue to through money at the economy.

The result looks like no or little near term inflation. No one including Yellen is saying we will not see serious inflation from the Central Banks actions but it may take longer to take hold.
Additionally I see no reason for the housing sector to turn around and with grain prices falling we just may push off the price increases a few years. Same result we have been discussing just a timing change.



It is a mistake to think businessmen are more immoral than politicians!
Keynes, 1937