Continued job creation could trigger 2015 inflation increase
Patrick Center July 7, 2014 | WGVU “We’re really looking at some pretty strong numbers.”
And yet, as chair of the Seidman College of Business, Paul Isely, points out polls indicate Americans believe the economy remains in a recession.
But the numbers indicate 2.5 million jobs created over the past year have dropped the unemployment rate to 6.1 percent.
“So it’s creating hope. It’s creating a willingness to maybe go out and spend something because you’re a little more sure of your job and its making businesses a little more sure about going and doing some investments because they’ve been holding of from doing some investments.”
So when the good times get rolling, Isely begins to keep an eye on interest rates or inflation going up.
“We're pretty safe this year. That's a next year type of worry. But if we see a few months of this type of number strung together we're six month away from seeing unemployment go above three percent. That's a number we have to worry about. Why do they go above? Because all of a sudden people start to get more wages. We're going to start to see that toward the end of this calendar year as all of these new minimum wage laws kick in. Because they'll get a raise and other people will get a raise and we'll start to see this wage inflation start to build in."
Isely says wage inflation is already underway where there certain industry sectors are experiencing a shortage of skilled workers.He says people will be happy with their pay raises but that will lead to everything becoming more expensive.
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