Long Term Perspective
Federal Reserve officials closely monitor the employment cost index, which measures total compensation costs. Compensation includes wages and salaries as well as benefits. Aside from a small spurt in the third quarter of 2001, compensation costs stabilized during the year.

Short Term Perspective
The ECI increased 3.7 percent in the third quarter of 2002 relative to a year ago. Economists are predicting a relatively stagnant unemployment rate through the end of the year; it is likely that compensation costs will post only modest gains in the next few quarters. This is good news for companies, but not for consumers.

PPI: Intermediate vs. Crude Materials   •   Excluding Food & Energy Prices: Intermediate vs. Crude   •   CPI vs. PPI - Finished Goods

Excluding Food & Energy Prices : CPI vs. PPI   •   Employment Cost Index vs. Wages & Salaries   •   Alternative Inflation Measures