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Illustration: Sarah Grillo/Axios
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.
"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."
"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.
Illustration: Rebecca Zisser/Axios
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.
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.
"So, yes, it's another sign of the jungle growing back — international relations becoming more conflictual as old rules of the order break down."— Robert Kagan
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."
"The sweat test ensures the seat stays free of surface damage over time," says a Ford video set to peppy music.