FRBSF Economic Letters
Economic analysis for a general audience
How Much Do Labor Costs Drive Inflation?
Tight labor markets have raised concerns about the role of labor costs in persistently high inflation readings. Policymakers are paying particular attention to nonhousing services inflation, which is considered most closely linked to wages. Analysis shows that higher labor costs are passed along to customers in the form of higher nonhousing services prices, however the effect on overall inflation is very small. Labor-cost growth has no meaningful effect on goods or housing services inflation. Overall, labor-cost growth is responsible for only about 0.1 percentage point of recent core PCE inflation.
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Analysis of current economic developments and the outlook
FedViews: March 9, 2023
Thuy Lan Nguyen, senior economist at the Federal Reserve Bank of San Francisco, stated her views on the current economy and the outlook as of March 9, 2023.
Western Economic Developments
Western Economic Developments is linked to via Fed in Print only.
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