We are about three months before we are out of the woods!

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"cost of an employee per hour spent working" (including the cost of worker benefits) is growing at a slower pace than previous highs. Year-over-year growth for the fourth quarter of 2022 was only around 1%, below the Fed's inflation target, this data is called the Employment Cost Index ("ECI"), and it reveals insight about the path of inflation. As Scott said...


The ECI also has tracked widely followed headline inflation numbers, as Scott showed by comparing this measure with the Consumer Price Index ("CPI") and core personal consumption expenditures ("PCE") price index, the Fed's preferred inflation gauge...

As he noted...

Both of these charts are pointing to a noticeable trend shift in labor costs. Granted, they're not imploding, but the pace of gains is slowing. And as we can see, that change tracks closely with the different inflation gauges. Consequently, they're easing as well.

However, this measure would still need to fall by half just to get close to "normal" levels again.


We are about three months before we are out of the woods!

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