National Bank of Canada 1/5: With wages on the rise, one would have expected some cost-push inflation. But after picking up steam earlier in the year, consumer prices seem to be moderating again as evidenced by core PCE inflation rate dropping in Oct to 1.8% y-o-y,
National Bank of Canada 2/5: or below Fed’s 2% target. The core PCE’s more recent trends should be concerning from #Fed’s standpoint given that the three-month annualized rate sank to just 1.1%, lowest since May last year. The strong dollar is keeping import prices under wraps
National Bank of Canada 3/5: & it’s also possible firms, intent in maintaining market share, are opting to absorb rising costs instead of passing them on to consumers. Their profit buffer, made more significant thanks to earlier corporate tax cuts, seems to be helping cushion
National Bank of Canada 4/5: the blow of rising costs. As Chart show, corporate profits have outpaced wages and salaries over the past decade.
National Bank of Canada 5/5: Third quarter data, which came out yesterday, was no exception as corporate profits rose to a record US$2.3 trillion or +10.3% on a year-on-year basis, which is more than double the 4.2% increase for wages and salaries.
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