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Labor Costs Point to Corporate Profit as Main Inflation Driver
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 Dec. 13, 2022 | ECONOMY | The continued drop in labor costs has economists pointing to private sector profits as a main driver of inflation, undercutting arguments from the Federal Reserve regarding its plan to bring down consumer prices that remain around 40-year highs. Unit labor costs, which are measured by the Labor Department to determine how much businesses are paying for workers to produce their goods and services, have been getting outpaced by profits over several quarters, leading economists to call out a trend. Paul Donovan, an economist with Swiss Bank UBS, wrote in a note to investors saying that [last] Wednesday’s labor cost numbers showed again that corporate profits are rising faster than labor costs. “Today’s inflation is more about margin expansion than labor costs,” he wrote. Earlier this week, Donavan said the slowing labor cost growth underscored “how little of the current inflation is labor related.” That’s a very different argument from the one put forward by many U.S. policymakers, both in the political and economic sectors. The Hill
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