Could Wages and Prices Spiral Upward in America?
The New York Times
A labor shortage that began as businesses reopened from pandemic lockdowns is helping to push up pay. The Fed is watching carefully.
Amazon, Bank of America and Chipotle are among a spate of companies raising wages this year as they compete for workers in a labor market with more open positions than unemployed job seekers.
But that positive development for workers could morph into a challenge for the Federal Reserve if climbing wages help to keep inflation high, prompting employees to ask for even more money and eliciting an upward spiral.
So far, many economists think such a situation can be kept at bay. But the Fed is closely monitoring inflation and pay data to assess the risk, because the consequences if wages and prices begin to drive each other steadily higher could be serious, requiring a response from the central bank that could be economically painful.
