So-called unit-labor costs soared 8.3 percent from July through September, the Bureau of Labor Statistics revealed Thursday. These costs indicate how much a business spends to produce one unit of output.
Consumer prices have been rising faster than hourly compensation, a measure that includes wages, salaries, benefits, employer contributions to benefit plans, and taxes. The Bureau of Labor Statistics reported that hourly compensation rose at a seasonally adjusted, annualized rate of 2.9 percent in the quarter, near its average in the decade before the pandemic. But after adjusting for inflation, hourly compensation fell at an annual rate of 3.5 percent.
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The Personal Consumption Expenditures price index rose 5.3 percent in the third quarter.
On Thursday, the Government also noted that labor productivity, a measure of how long it takes to produce a unit of output, fell the most since 1981.
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Following the news, Former Clinton Treasury Secretary Larry Summers raised concerns over the economy and inflation during an interview on CNN's "New day."
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"I do think that unfortunately some of the predictions that I made about the consequences of stimulus do seem to have come true," Summers told CNN host Brianna Keilar. Summers predicted earlier this year that increased government spending from the coronavirus stimulus packages would set off "inflationary pressures" that haven't been seen in a generation.
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Summers, who has criticized Democrats' plans to spend trillions of dollars, clashed with Treasury Secretary Janet Yellen when she claimed he was "wrong" for worrying about out-of-control inflation. "I think it’s a mistake to think of this as only an issue about stimulus," Summers added. "It’s also an issue around what’s happened with the Federal Reserve. It’s also an issue around the fact that Covid mutated into the Delta variant. It’s also related to overall geopolitical developments and climate that have impacted on the energy markets."
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Keilar asked how long Summers expected this inflation to last, leading Summers to admit the economy may be suffering for longer than anticipated.
"I think it’s almost certain to last for another six to nine months, and it could well last longer," he replied.
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While Summers urged the Biden Administration and Congress to work on passing more infrastructure bills, he also warned the Federal Government to be more careful when it comes to their focus.
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"I do think we’ve got a real issue with an overheating economy, and the Fed’s going to need to step in and help to control this. They started that process yesterday. I do think we need to be careful with our policies generally now to be focused on providing more supply rather than focus on supplying more demand," Summers said.
Democrats have often downplayed the threat of inflation. White House Chief of Staff Ron Klain retweeted a comment claiming that concerns over inflation were only "high-class problems."
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