Mohamed El-Erian: Wage growth will be in excess of price inflation

Mohamed El-Erian: Wage growth will be in excess of price inflation

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Language: English

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00:00
muhammad deep there were a lot of conflicting things i mean the unemployment rate at 5.8 it's a darn good number for for where we are in this pandemic and how quickly we snap back then again there are a lot of openings that don't seem to be getting filled and that's where the the dialogue comes in and it becomes politicized are there too many too many reasons to stay home still is it just safety issues about covid what's
00:30
really going on in your view so the answer is we don't know joe and there's also labor force participation that's gotten stuck at 61.6 and that is a concern and i can argue that it's either covered which means it's reversible or there's structurally something going on in the labor market my inclination is to say it's more than louder than the former but you've got to be that honest we simply do not know and in addition you
01:01
get conflicting indicators depending on whether you look at the establishment survey or the household survey so we don't know but what's clear is elsewhere joe inflation and that has is going to become more and more of an issue for markets and it's going to separate winners from losers in a significant way it's not a great story either muhammad because any wage gains that we see that that are so hard you know to come by and we're finally seeing some and where you know
01:33
maybe when there's a shortage of workers you think okay that might be one of the bright sides that that people make a little bit more money but if it's eaten up by inflation you're actually losing ground and that doesn't help anyone it doesn't but my my feeling is we're going to see wage growth in excess of price inflation because for the first time in a very long time labor has pricing power so don't underestimate people are scrambling to find workers
02:03
people are offering all sorts of bonuses that are soon going to translate into the whole wage ladder so we're going to see wages going up and you and i are going to be talking not just about the level and persistent of inflation which already is way beyond the so-called transitory camp but we're going to talk about how different sectors and different companies react to that and that's why it's going to be really important for stock investors to figure out their sensitivity to inflation

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