>However, Citigroup commented that the payroll report is not useful
>for understanding economic developments outside labor statistics.
Did they really? That's silly. I'm sure few retailers below the Tiffany bracket would agree.
>Three separate analysts have commented that the Fed must remain
>vigilant against "dwindling labor market capacity leading to higher
>wage growth."
Wage growth is lagging inflation.
> They are also disturbed by rising non-wage compensation.
That's where the problem is - health insurance premiums. There's a big gap between the growth in direct pay and pay including fringe benefits, and health is the culprit.
> One predicts that Greenspan will continue to raise rates as long
>as compensation growth remains "unsustainable." Labor is clearly
>back in the gunsights...
Greenspan would probably raise rates even if this report weren't so strong. Inflation is creeping higher - ECRI's future inflation gauge was up this morning - and, though he doesn't say it out loud, he's got to be worried about the current account deficit. Nothing like a growth recession (or worse) to bring the international accounts closer to balance.
Doug