Just as American workers are starting to see some real improvement in hourly pay, the fear is that — as central bankers traditionally do — the Fed will raise interest rates. That's because "wage growth" means inflation, according to economic orthodoxy, and inflation is the Fed's main enemy.

But not this time: Leading economists tell Axios that, at least in part because inflation does not seem to be accelerating, the Fed appears prepared to let the wage party continue.

• Last month, wages grew by 3.2%, the biggest increase since 2009 and a full 1.2% higher than inflation, the Bureau of Labor Statistics reported last Friday. Inflation was just 1.9% for the year.
• This means that workers — after 35 years of essentially flat wages — are finally clawing back real added income.
• Normally, the next thing would be for the Fed to take away the punch bowl — to raise interest rates a tick. But, as Axios' Dion Rabouin reported last week, Fed chairman Jerome Powell appears likely to keep interest rates flat this year.

"Powell seems to be adopting the 'whites of the eyes of inflation' position that I and many others have advocated for a long time," Larry Summers, who served in both the Clinton and Obama administrations, tells Axios. "No need to worry about apparently tight labor markets and wage increases until product price inflation is accelerating past 2%. We are not there."

• The Fed strategy is buttressed by new research showing that ultra-low unemployment generally does not lead to wage surges and big jumps in inflation. In a paper published today, three researchers at the San Francisco Fed said they do not expect "an abrupt jump in wage growth."
• Last summer, we reported a growing opinion among economists that the Fed should not apply the brakes to wages, but let workers catch up more.
• "Too often central bankers talk about any wage gains beyond productivity growth as immediately automatically inflationary — when they need not be," Adam Posen, president of the Peterson Institute of International Economics, tells Axios.

"This is a welcome public recognition by the [Fed] leadership," Posen says. "Combined with their willingness to wait and see on inflation data, this could result in some real wage gains. And I think they're right to take that risk."

Jason Furman, a former chief economic adviser to President Obama and now a Harvard professor, says that, to achieve sustained real wage growth, productivity will have to grow much faster: Over the last decade, productivity has risen less than 1% a year, lower than the 3% average in the 1950s, but no one has figured out why — nor are they confident about how to improve its performance.

"There is still scope for faster wage growth through either faster productivity growth or a compression of inequality," Furman says. "But that scope may be more limited than Powell or any of us might like.

Democrats and Republicans agree on almost nothing, but they are decidedly aligned on one thing — by a 60% majority, both fear automation and the elimination of jobs, according to a just-released survey.

Jed Kolko, chief economist at Indeed, tells Axios that the parties are on opposite sides of almost every labor issue, such as trade, immigrant workers and the idea of universal basic income for everyone, but they still fear robots. "The bipartisanship about automation stands out as a rare window of agreement," he says.

• Cities dominated by Democrats are less likely to face widespread job losses to automation, Kolko says, because companies there are tech-heavy and require intricate skills (here is the list).
• Republican-majority cities are dominated by more routine jobs requiring less education, making them more subject to automation (here is the list), Kolko says.

China today significantly escalated the stakes in its brinkmanship with the U.S., sentencing a Canadian man to death in a case rooted in an unrelated extradition request from the United States. The move is another sign of a global shift to tough-guy politics.

The sentence against Robert Schellenberg, a Canadian, appears to be retribution for Canada's jailing of a senior Chinese executive on a U.S. warrant for allegedly violating sanctions against Iran.

• Meng Wanzhou, chief financial officer of Huawei and daughter of the company's founder, is out on bail awaiting possible extradition to the U.S.

The big picture: Beijing appears to be furious about the case. But, as we reported last week, Schellenberg is also a pawn in a larger game — the new age of hostage diplomacy, in which leading countries are now imprisoning each other's nationals as part of their disputes, trade or otherwise.

• Robert Kagan, a fellow at the Brookings Institution, says this is a prime example of a return to the more brute-force state of global dispute settlement prior to World War II, when "trade wars became real wars."
• In his latest book, "The Jungle Grows Back," Kagan argues that nations are resorting to strongman-wins-out global politics. "I would consider this new round of hostage-taking a sign of such escalation," he tells Axios.

"So, yes, it's another sign of the jungle growing back — international relations becoming more conflictual as old rules of the order break down."

Go deeper: Review of The Jungle Grows Back

How humans were tamed (Richard Wrangham — WSJ)

How vanity will save retail (Erica Pandey, Harry Stevens — Axios)

Diesel futures are another sign of a coming economic slowdown (John Kemp — Reuters)

Utility is responsible for most big California fires (Russell Gold et al. — WSJ)

The UK's leading papers continue to urge a 2d Brexit vote (The Economist)

Ford, that shining beacon of American innovation, has done it again. Its latest disruptive invention is a fake sweaty posterior.

Axios' Kaveh Waddell writes: The groundbreaking backside has a name, of course: Robutt. According to the Ford Europe blog, it is inspired by "the dimensions of a large man."

• Robutt is designed to test car seats, subjecting them to 10 years' worth of abuse in three short, sweaty days.
• To achieve optimum moistness, the faux tush is heated to body temperature and continuously wetted with about a pint of water.
• Attached to a robotic arm, the damp buttocks, mimicking a post-workout rump, are made to sit, roll and twist in a car seat.

"The sweat test ensures the seat stays free of surface damage over time," says a Ford video set to peppy music.