Long Term Perspective
The employment cost index is the most comprehensive measure of compensation costs faced by employers. Wages and salaries account for the bulk of the index, whereas benefits costs account for about one-third of compensation costs. Fed officials monitor this indicator because they believe that accelerating pressures on compensation will eventually lead to price increases for consumer goods and services.

Short Term Perspective
The employment cost index increased 3.9 percent in the third quarter of 2003 relative to a year earlier. At the same time, wages and salaries increased a modest 2.9 percent. The primary factor behind the gains in the ECI is a continued upward trend in benefit costs - up 6.5 percent in Q3 relative to a year ago. Fed officials are not worried about wage pressures these days.

Alternative Inflation Measures   •   Gold Prices   •   Employment Cost Index   •   Civilian Unemployment Rate

Pool of Available Labor   •   Nonfarm Productivity   •   Treasury Yields   •   Stock Prices   •   Fed Monetary Policy Summary