Fed Treading on Thin Ice as U.S. Housing Bubble Weakens

The idea, as Fed economists see it, is that as overall spending is reduced, employers will hire fewer workers. As unemployment rises, employees are in a weaker bargaining position, and this leads to slower wage growth. Slower wage growth, the Fed hopes, will lower inflation.

http://www.cepr.net/columns/weisbrot/2006_06_30.htm


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