Less than a year ago, David Rosenberg fundamentally shifted his thesis from deflationary to stagflationary at first, and then to outright inflationary, aka from bearish to bullish, based on one simple thesis [6]: labor costs, and thus wage inflation - that all important harbinger of broad economic inflation - have nowhere to go but up. Unfortunately, they also have another direction they can go: down.
As today's "Productivity and Costs [7]" report from the BLS confirmed what many already know, namely those who collect a regular wage, wages are not going up. In fact, in the fourth quarter, unit labor costs plunged by 1.3%, the most since the second quarter of 2010, and prove that not only is the Fed's QE not being "trickled down" into wages, but that anyone who bet on a simple reflation thesis (not to be confused with the runaway inflation that would result from unlimited currency debasement which as everyone knows is the Fed's Plan Z) based on an expectation that wages will revert to the mean, has been proven wrong.
[8]
And a more amusing correlation - relative to GDP.
[9]
As for where the offsetting surge in productivity is coming from in a workforce addicted to social media and other constant distractions: perhaps that is the true $64K "New Normal" question which the central planners should be answering.