> BLS DAILY REPORT, TUESDAY, MAY 23, 2000:
>
> Growing numbers of economists are boosting inflation estimates for the
> year, suggesting widespread skepticism about the success of the Federal
> Reserve's campaign to restrain price increases. Analysts surveyed by the
> Federal Reserve Bank of Philadelphia now expect inflation of 3.1 percent
> this year and 2.7 percent in 2001, as measured by the CPI. In February,
> analysts expected inflation of just 2.5 percent for the remainder of the
> of this year, and 2.6 percent in 2001. Analysts polled by the blue Chip
> Economic Indicators newsletter, for example, this month raised their
> estimates for inflation to 3 percent for the year from 2.8 percent in
> April and 2.4 percent last fall. The National Association for Business
> Economics revised its 2000 inflation estimate from 2.5 percent in February
> to 3 percent this month. Forecasters still haven't touched long-term
> projections: they continue to estimate inflation of about 2.5 percent for
> the next 10 years. for the past few years, falling import prices have
> made it harder for domestic companies to raise prices, while massive
> productivity gains largely offset wage and benefit increases wrought by
> one of the tightest labor markets in U.S. history. But in recent months,
> import prices have risen as the global economy continues to recover, and
> many companies report that wage and benefit expenses are increasing more
> rapidly as they struggle to recruit and retain workers. Also, many
> managed-care companies have raised premiums, hurting companies' bottom
> lines and increasing pressure to raise prices (The Wall Street Journal,
> page A2).
>
> The Fed is so worried about inflation that it may kill off the bull
> market, says Eugene Ludwig, managing partner of the Promontory Capital
> Group, U.S. Comptroller of the Currency from 1993 to 1998, and an
> executive council member of the Washington-based group Get America
> Working, writing on the op. ed. page of The Wall Street Journal (page
> A26). "If our record expansion proves anything, it's that dipping deeper
> into the labor pool to sustain high growth without inflation is not only
> possible, but key to new levels of prosperity.
> Instead of dampening interest-rate hikes, we should take advantage of it,
> and address inflation fears with targeted labor-policy levers. One set of
> policies should remove the brakes on labor demand, especially by cutting
> bloated payroll taxes that account for 34 percent of federal revenue and
> artificially suppress job growth. Another should free up labor supply by
> removing barriers that encumber new workers that would enter the work
> force given the chance. Washington has already headed in this direction
> with new legislation allowing people with disabilities to work without
> losing benefits, exempting seniors from the Social Security tax, or
> dramatically increasing the number of visas available for emigrating
> high-tech workers along with other proposed immigration reforms."
>
> Longshore workers, now trained for computerized equipment, have seen their
> stock rise, says The Wall Street Journal's "Work Week" column (page 1).
> In New York harbor, shippers and the International Longshoremen's
> Association hope to add another 500 workers and members. On the West
> Coast, employment is up 23 percent since 1994 to about 9,600. Shippers
> grumble about ILWU skepticism of even more automation, but union clout has
> helped boost the base hourly wage 31 percent to $26.68 an hour from 10
> years before.
>
> United Parcel Service, Inc. and others, eyeing a tight labor market, offer
> tuition reimbursement for part-timers (The Wall Street Journal, "Work
> Week" feature, page 1).
>
> Coffee prices surged 7 percent, the biggest gain in 6 months, after the
> world's largest growers agreed to limit exports in an attempt to boost
> prices that had plunged by as much as a quarter this year. Even with the
> rally, prices still are down 14 percent from a year ago (The Washington
> Post, page E1).
>
> Gasoline prices jumped 5 1/2 percent per gallon in the past 2 weeks, as
> federal anti-smog regulations bit deep on the East Coast and in the
> Midwest. The higher cost of refining gasoline to meet stricter
> regulations, coupled with higher crude oil prices, pushed the average
> nationwide cost to $1.5841 per gallon Friday, analyst Trilby Lundberg said
> That was up 5.46 cents per gallon from May 5, according to the Lundberg
> survey of 10,000 stations nationwide. After falling nearly 7 cents per
> gallon, the price is now within about a penny of the year-to-date high of
> $1.5958, recorded March 24 (The Washington Post, page E13).
>
> Mexico is "perk paradise" for American middle managers, contends Joel
> Millman in The Wall Street Journal, page B1). A tight labor market has
> given midlevel professionals extraordinary leverage in negotiating
> salaries and perks, but few can expect to do as well as the white-collar
> cadre working for foreign companies in Mexican assembly plants. Asian,
> U.S., and European maquiladoras -- which assemble goods for export with
> certain tax advantages -- are adding capacity at a rate of 100,000
> blue-collar operators a year. That's creating tremendous demand for
> supply managers, accountants, engineers, personnel directors and other
> administrators. According to a recent study by Clemex-WEFA, a
> Philadelphia economic consulting firm that follows Mexico, the country's
> maquiladoras will add 7,000 white-collar jobs along the border this year.
> It estimates that total demand will grow by almost 50,000 through 2004.
> If you're experienced, speak Spanish, and are willing to relocate to
> dusty, sunbaked northern Mexico, the offers are there. According to those
> doing the barraging, managerial salaries along the border are rising at a
> rate of 8 percent a year -- three times the U.S. average -- and recruiters
> are having a field day raiding maquiladoras for personnel. And the extras
> companies are willing to throw in -- golf club memberships, company cars,
> home-leave allowances, have become standard.
>
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