Health care cost-driven core pce impacts wage growth, Anna Wong notes

Health care cost-driven core pce impacts wage growth, Anna Wong notes
Core pce-cpi inflation gap affects wages

Anna Wong said the Employment Cost Index (ECI) reading underscores the importance of the gap between core PCE and core CPI inflation measures.

Wong explained that inflation reflected in core PCE, but not in core CPI, is driven by rising health care premiums, which makes total compensation for labor more expensive and dampens wage growth over time.

Wong has previously examined fiscal pressures from rising Medicare and Medicaid costs, suggesting that reducing obesity could improve U.S. fiscal sustainability. She has also reported that more than 900 supply bottlenecks identified from the last quarter remain persistent as financing conditions tighten. These issues underline ongoing cost challenges across the economy.

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