This article discusses how inflation is outpacing earnings. Naturally, we'd see that as a bad thing, but I see this as an opportunity for us to get out of our unemployment. With real wages falling, businesses will be more willing to hire more workers, as workers will accept a lower pay in order to have a job (demand for labor increasing). One question that may remain is how long it will take for unemployment to decline, and how high inflation will rise and with how much more we will be buying what we produce.
http://www.nytimes.com/2012/04/14/business/economy/consumer-inflation-up-modestly.html
3 comments:
This also has a lot to do with what policies will be implemented, if policies are decided upon, and how long it will take them to have an effect. This also depends on whether or not the government will try and regulate the inflation, or, like you argued, pounce on the opportunities that inflation and current policies have already occurred.
Thus, the complicity of how many different policies could be utilized and which goals are most important do pose a challenge to our nation's policy makers, whether it leans heavily on fiscal policy or heavily on monetary policy, as you said.
I don't think a decrease in real wage is going to decrease unemployment rate. It depends entirely on how well companies are doing. No companies would hire people because the wage is cheap and have nothing for them to do.
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