Wednesday, March 7, 2012

Unit Labor Costs Soaring

Another sign of the developing price inflation. The Bureau of Labor Statistics has released unit labor costs for the 4th quarter.

Unit labor costs in nonfarm businesses increased 2.8 percent in the fourth quarter of 2011. Unit labor costs rose 3.1 percent over
the last four quarters. Actual compensation grew by 3.7%, however, BLS adjusts for supposed productivity gains.


  1. I have an observation about how rising prices are "hidden" from the public, perhaps reflecting the rising unit labor costs?

    My better half recently walked into a well known nation wide department store, a very middle class store she has been going to for decades. She was shocked at the low prices of women's clothing throughout the store. Everywhere we looked there were extremely low prices on almost every bit of clothing.

    Upon further inspection she noticed the quality of almost All of the clothes was sub-par, a kind of quality she was used to finding in the lower class chains of department stores she usually spends little time and money at.

    It wasn't simply that the store had replaced higher quality brands with lower quality ones, but that some of her favorite brands which once used to be of higher quality were now of such low quality she wasn't interested in buying them even though they still "looked" the same as before.

    My better half is very tight with money so I was kind of shocked to hear her say she was going to have to start shopping at the higher class stores which were MUCH more expensive to get the same quality she was getting at the middle class store. This also meant that in the future she will be buying fewer clothes at a time while spending more. Ah, you get the picture, my wallet hurts thinking what this means.

    I imagine most People see these low prices of once high quality brands and jump for joy not realizing prices have actually gone through the roof.

    Lower quality clothing tends not to last as long, which means they will be replacing this clothing more often, which likely means they will be spending more on clothing than before only it will take awhile for them to notice, if they do at all. Seems to me anyway.

  2. RW: isn't reading the numbers in order to forecast the future what Krugman et al are supposed to be doing? Too bad he didn't have a coherent theory behind his interpretation. He is going to have a lot of egg on his face when his book comes out during the manipulated boom period.