at the finance, insurance, and real estate markets can provide to them, hurting their revenue and wages. Next, the article says that wage gains are increasing due to the labor demand outstripping (p.3) the supply of workers. Although I am not quite positive, I must interpret this to be occurring because more workers are being hired than there are workers entering the workforce. This would satisfy the statement that the demand is higher than the supply of labor.A wage increase could also be an inflation worry for the Federal Reserve. There might be cause for concern because higher wages could insinuate that the cost of living has gone up due to increased prices of products that consumers buy. However, the recent trend in real wages (wages adjusted for inflation) has fallen below real productivity. Therefore, an increased wage could simply be the result of the economy correcting this negative trend. It may not be a sign of inflation because productivity is so high that it must compensate for previously low wages. Further on, the article talks about a bigger wage-related concern for the Federal Reserve. Consumers have kept our economy booming due to spending carelessly and freely, and the concern arises out of whether they will continue this trend with higher paychecks. If so, companies will raise prices of their products and inflation will occur. If this occurs, there will be a larger difference between consumers nominal wages (wage paid today in current dollars) and real wages. Companies will increase prices when the demand for their products is high simply to increase their profits. When this happens, the market in the long-term fixes itself due to the law of demand, which states that as the price of a good or service increases, the quantity demanded of it decreases. So, theoretically, it is important to note this for economics sake. The article says that higher gas prices are hindering consumers from spending their i...
