BLS DAILY REPORT, THURSDAY, SEPTEMBER 12, 1996
RELEASED TODAY: The Producer Price Index for Finished Goods advanced 0.3
percent in August, seasonally adjusted. For July, the index registered no
change, which followed a 0.2 percent increase in June. Prices received by
domestic producers of intermediate goods rose 0.2 percent in August after
declining 0.3 percent in the prior month. The Crude Goods Price Index rose
0.2 percent following a 2.0 percent increase in July ....
__Labor Secretary Reich tells the National Association of Business
Economists meeting in Boston that the U.S. unemployment rate could probably
fall below its recent trend without rekindling inflation (Daily Labor
Report, pages 2,A-6). Reich also contends that any attempt to pursue a
"zero inflation" goal would be ill-timed as the country begins the welfare
reform plan that will try to move about 4 million people into jobs
....Structural changes, accompanied by somewhat stronger productivity
growth, have meant that unit labor costs for businesses are rising in line
with inflation, Reich says ....A recent study by economists Lisa Lynch, the
Labor Department's chief economist, and Sandra Black of Harvard University
finds that raising the educational level of employees by one year results in
a boost in labor productivity of as much as 8.5 percent in manufacturing
plants and 13 percent in nonmanufacturing establishments ....
__Fed Governor Laurence Meyer says the link between the nation's
unemployment rate and inflation seems to have changed, but it is still too
early to tell (Daily Labor Report, page A-2) ....Meyer questions the
reliability of recent productivity data, noting that government reports for
1994 and 1995 point to an abrupt slowdown in output per hour at a time when
the U.S. economy was expanding near its potential rate of growth ....The
former St. Louis-based macroeconomic forecaster says he examines unit labor
costs, average hourly earnings, and the employment cost index for signs of
rising wage pressures. He noted that the ECI tends to be less volatile
than productivity and cost measures, that changes in the ECI generally are
more gradual and a better indicator of evolving trends ....
__Peter Passell's "Economic Scene" feature is published on page A1 of The
New York Times, headlined "Letting the Good Times Roll: The Case Against a
Rate Rise" ....Says Robert J. Gordon, an economist at Northwestern
University and a leading researcher on the relationship between employment
and prices, "This is an excellent time to find out how much lower we can
push unemployment" without kicking up inflation. And even some experts on
Wall Street are starting to take these academic arguments more seriously
....
__Inflation pressures are starting to mount in many parts of the country,
fueled by further labor market tightening and rising wages, the Federal
Reserve reports. But those pressures have yet to yield a substantial boost
in consumer prices, the Fed noted in its latest "beige book" or summary of
current economic conditions ....(Daily Labor Report, page D-1).
__Despite rising wages across the United States, prices generally remain
steady, the Fed reported yesterday (Washington Post, John M. Berry article,
page D9). The Fed's latest nationwide survey of economic conditions did
little to clarify the outlook for inflation or the economy for the central
bank policymakers -- who will meet September 24 to consider whether to raise
short-term interest rates. Fed officials are concerned that labor markets
have become so tight that a faster rise in wages could cause inflation to
worsen ....
__Wages are rising as the economy across most of the nation continues to
grow at a moderate pace, but there is little evidence yet of inflation
taking root, the Federal Reserve reported (New York Times, page D1)
....Signs of inflation "were varied and generally inconclusive, although
there appears to be greater upward pressure on wages than on prices," the
Fed report said. "Business activity in most districts is reported to be
good and expanding moderately" ....
__Labor markets tightened and wages rose modestly, but price increases were
"notably absent" in late summer, according to the Federal Reserve (Wall
Street Journal, page A2). The Fed is closely watching for two inflationary
red flags -- a rapidly accelerating economy or notable wage pressures -- and
this latest report offered a little comfort on both points ....
The Washington Post's "Digest" feature (page D10) includes a box that shows
the unemployment outlook for the European Union, 1997, by percent of the
work force predicted to be unemployed. Luxembourg is the lowest, at 2.8
percent, and Spain is the highest, at 22.7 percent.
General Motors Corp. is proposing to guarantee lifetime employment to its
current United Auto Workers employees in exchange for union permission to
reduce its ranks after those members retire, says the Wall Street Journal
(page A3). The proposal is part of a 12-page document GM presented Tuesday
to the leadership of the UAW as part of contract negotiations ....
DUE OUT TOMORROW:
Consumer Price Index -- August 1996
Real Earnings: August 1996
