STATEMENT OF CHAIRMAN MARTIN N. BAILY
PRESIDENT'S COUNCIL OF ECONOMIC ADVISERS
The economy is enjoying continued low and stable inflation, while experiencing solid growth, low unemployment, and real wage gains.
The Consumer Price Index increased 0.3 percent in August. Excluding the volatile food and energy components, the core CPI edged up just 0.1 percent. These new numbers provide further proof that inflation remains tame -- despite more than 2 years of an unemployment rate below 5 percent.
Over the 12 months ending in August, the total CPI rose 2.3 percent -- up from 1.6 percent during the year-earlier period. All of the acceleration is due to energy price increases. Excluding food and energy, the core CPI over the last 12 months slowed to just 1.9 percent, from 2.5 percent during the year-earlier period.
While inflation remained low, real wages increased 1.2 percent over the past 12 months -- the 4th year of real wage increases after 9 years of stagnation. These wage gains have been supported by a 2.1 percent per year increase in productivity -- a notable acceleration after more than two decades averaging1¼ percent growth. Higher productivity growth means that workers are producing more, supporting sustained real wage growth without inflation.
It is now clear that August was another month of economic growth, making it the 101st in this expansion. As we also learned today, inventories remain lean with respect to sales, providing good prospects for continuing the expansion. Policies of fiscal discipline, investing in people, opening markets abroad and preparing for the future are continuing to build a strong economy that is raising living standards and increasing opportunities for all Americans.