I've written before about the alarming consensus developing in certain wonkish circles that suddenly labor markets are tightening up, and accelerating inflation is just waiting in the wings. Paul Krugman has now weighed in several times against these "inflationistas," and his latest effort is the most comprehensive.
He adduces four arguments: First, measured wage growth is probably to some extent a statistical artifact representing the fact that during bad weather hourly workers, who are paid less, tend to be idled — making measured wages only seem to increase. Second, if you look closely at the data, the case for wage growth even existing at all is barely there. Third, wage increases are well below what they were before the financial crisis, and everything we've learned since then suggests that a greater fraction of GDP coming in the form of wages would be highly beneficial.
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