But these same analyses suggest that, as headline inflation recovers to more normal levels, the impact of past low inflation on wages could be waning. In terms of the pass through from wages to prices, the signals remain mixed. As wages have picked up, labour productivity has also recovered.
Other measures of labor compensation, such as the employment cost index, have their own particular deficiencies and can yield conflicting signals of trends in labor costs. An unpleasant implication of these various data problems is that they may make difficult the development of structural models incorporating wage behavior that are reliable enough for policy analysis, despite their attractiveness to policymakers like me.