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Wage-Price Spiral Ahead? Not Really

Jean Boivin, PhD profile picture
Jean Boivin, PhD


  • We don’t see a wage-price spiral. Companies are actually paying less in labor per unit of output, we find. We think wages can rise more without adding to inflation.
  • The S&P 500 plunged to new 2022 lows last week. We remain overweight equities in the inflationary backdrop but acknowledge mounting challenges.
  • The Fed is set to raise its policy rate by 0.5% this week in an attempt to rein in inflation. We think the eventual sum total of rates hikes will be historically low.

Man using calculator

bymuratdeniz/E+ via Getty Images


U.S. private sector wages jumped 5% last year. That’s the fastest wage growth since the 1980s.

Some, including Fed Chair Powell, say this is evidence of an overheating labor market - which could cause further consumer price spikes.


This article was written by

Jean Boivin, PhD profile picture
Jean Boivin, PhD, is head of economic and markets research at the Blackrock Investment Institute. Prior to joining BlackRock, Dr. Boivin served as deputy governor of the Bank of Canada and as Finance Canada’s associate deputy minister and G7/G20 deputy. He has taught at Columbia Business School and HEC Montreal. He writes about the global economy, global markets and policy.

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Comments (7)

terryongarland profile picture
Opinion . Productivity rising ? Firms like BlackRock have an outsized influence on a lot of products worldwide. They are the ultimate symbol of globalization.
If one was looking for wizards behind the curtain influencing and shaping capital flows , opinion etc..BlackRock fits the bill. They scare me because their influence and most importantly scale, that can make your break the lives of millions of people.. and they have.
Mac Timred profile picture
Great article. I hope the Fed is looking at these data!
sethmcs profile picture
Let's see PPI is at 11% and CPI is at 8.5%. The gap should indicate that companies cannot fully pass on price increases.
I'm competent and experienced and show up for work everyday, I can demand and receive large increases in pay. it's awesome! and many of my favorite stocks are massacred so I'm slowly adding.
bluescorpion0 profile picture
only 1 thing you have to remember: governments will default on their debt in some way, with certainty. Whether they do it slowly or rapidly is merely a question of time - although it can make a big difference for the individual's lifetime. Necessity may require it to go faster, which is what we see today.
bz1516 profile picture
Is it an oversimplification to say your analysis is that we are not in a cost push inflation, but rather a demand driven situation which should self correct earlier and with less difficulty?
vooch profile picture
Biden = Andropov
Kamala = Chernenko

Invest accordingly
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