A Benjamin Cole post
Unit Labor Costs Tumble in Wake Of Fisher’s Wage Concerns
What a track record!
Richard Fisher, Dallas Fed President and FOMC board member, is peerless. You could make a lot of money listening to Fisher, and investing accordingly, and if so by the opposite direction indicated, that is of little concern to the indomitable Fisher.
The latest Fisherism was first unfolded on Oct. 10, when the press-happy central banker regaled The Dallas Morning News with the horror that wages were rising faster than prices in Texas, then an oil-boom state.
Fisher didn’t seem to have much corroborating evidence, but just the idea of it was worrisome enough to hold press pow-wows. Nationally, warned Fisher, “[T]here are concerns about getting it [wage growth] under control,”
Except the U.S. has had deflation in unit labor costs for the last half-year.
The Bureau of Labor Statistics’ non-farm business unit labor cost index for Q3 came in at 104.015, down from the Q2 reading of 104.328, which was down from the Q1 reading of 105.359, according to the FRED website of the St. Louis Fed.
BTW, the index read 103.538 in Q4…of 2008. In six years, unit labor costs are up less than a half-percent. Not annually compounded, that’s total!
There is something enthralling about Fisher, who not only is wrong, but perfectly and exactly wrong, like a deaf talent scout at a musical audition.
- Consider it was Fisher who visited Japan in April 2009 and intoned, “I consider inflation an evil spirit that rots the core of economic prosperity and must never, ever be countenanced.” Yes, he said that…in Japan.
- Then there was the Fisher personal investment portfolio that went super-short (leveraged short bet, $3 mil or so, maybe more) in May 2010. That Fisherian bold thrust called the market bottom. Set aside the issue of an FOMC board member with a personal investment portfolio super-short on America, and recall the DJIA rallied from there, and Fisher’s money managers closed out his positions with large losses. Not only did the DJIA rally in 2010 coincident to Fisher’s super-short bet, it is up about 80% since then, while the S&P 500 and Nasdaq have about doubled.
- Or consider Fisher’s advice in June 2008, delivered to the Council of Foreign Relations in New York City. Fisher told the august notables that “though the economy still faces a period of slowdown, or ‘anemia,’ and smaller businesses in particular are likely to feel some pinch from a tighter credit environment…the U.S. will skirt recession,” according to The Wall Street Journal.
- It gets painful reading about Fisher, but soldier on with this nugget: “I have a reputation for being the most ‘hawkish’ participant in the deliberations of the Federal Open Market Committee,” Fisher said in 2009. “And I have a record that substantiates that reputation, having voted five times against further accommodation during the commodity-driven price boom of 2008.”
So, understandably, I am 100% certain that there will be no meaningful wage inflation in the U.S. in coming years. I have comfort stronger than the Rock of Gibraltar: Fisher suggested wage inflation would be a problem. That means wages will be the least of our inflationary concerns, which themselves will be minimal.
That is money you can put in the bank. Fisher said so (the opposite, that is).
Fisher, an active menace to American prosperity—and perhaps even sanity—will retire next year. Fisher’s disappearance from the FOMC promises sunnier days for Americans, but with one small dark cloud: How will we know what to do, without our infallible Fisher reverse weather vane?