Inflation is too much money chasing too few goods so prices rise. So for inflation to increase over the next 12 to 16 months you predict an increase in GDP and a robust growing economy, increased consumer spending, etc., yes?

Jobless growth is occuring, as the Financial Times suggests. Productivity is part of it as we are doing more work per person. And the scalability of the more modern busines. For example, a web site that earns $10 million a year doesn’t need that many more people to earn $100 million a year. In the past, a manufacturing plant would have needed significant investment in people and equipment to increase to the revenue 10 times.

But remember the overall level of unemployment isn’t that high. Full employment is not 0% unemployed, rather somewhere around 4-5%.

Unemployment is a big issue in the news these days. Remember that unemployment is a lagging indicator, meaning that the recovery will have to be well underway before employment picks up. Not many companies hire new employees until they see a pick up in sales that justifies it. So the economic pick up has to occur first.

 We don’t really know what employment should look like in a business cycle with many new types of employment. This is going to provide economists and others with better data for future guidance over time. But alas, you will have to wait. Nothing comes very quickly in economics! 🙂