Thread: Inflation May Eat Up Pay Raises and Economy Slowing

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Inflation May Eat Up Pay Raises
More Companies Replacing Pay Hikes With Bonuses

POSTED: 4:50 am PDT July 28, 2006
UPDATED: 4:58 am PDT July 28, 2006

NEW YORK -- A new survey suggests that this will be another year of modest pay increases and that inflation might eat up those gains.

The Labor Department's overall Consumer Price Index is on pace for a 4.7 percent increase for 2006, while pay raises are expected to stay at 3.7 percent next year.

The survey, by Mercer Human Resource Consulting, found that the only good news may be that top workers will get bonuses and other cash incentives from employers as companies rely less on salary increases and more on incentives like year-end bonuses to retain employees.

Of the 950 employers surveyed by Mercer, representing nearly 12 million workers, about 85 percent said they plan to offer short-term incentives in 2006.

A quarter said they increased the number of employees eligible for cash awards, and a quarter said they're giving bigger awards.

Only about 5 percent decreased the number of employees eligible and the amount of cash given.

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Economy Slows; Inflation Grows

POSTED: 9:26 am PDT July 28, 2006
UPDATED: 9:39 am PDT July 28, 2006

WASHINGTON -- The government confirmed Friday that the U.S. economy is slowing.

The Commerce Department estimated second-quarter economic growth at an annual rate of 2.5 percent, about half the rate of gross domestic product growth seen in the first three months of the year.

It was the slowest pace since the fourth quarter of last year, when the economy was hurt by the fallout from Gulf Coast hurricanes. Further, it was short of expectations.

Gross domestic product measures the value of all goods and services produced within the U.S. It is considered the best barometer of the country's economic health.

Friday's report goes into the mix of items to be considered by the Federal Reserve when it meets next month on interest rates. At issue is whether it will soon pause in its rate-hiking.

Even as growth cooled in the second quarter, inflation was heating up.

An inflation gauge closely watched by the Federal Reserve showed that core prices, excluding food and energy, jumped at a 2.9 percent annual rate in the second quarter. That was thought to be above the Fed's comfort zone.

The central bank's next policy meeting is Aug. 8.

If employment slows down, and home builders are not building like a few months ago.....are we expected to put illegals on unemployment too?

And just where do our politicians think illegals will work, if the job market is falling off?

Saw that this morning. I knew this was going to happen. My sister told me I was wrong. Guess I can call her up and say, "See?"

are we expected to put illegals on unemployment too?

Moose, I'm sure that will be one of the next things they will demand as part of their "civil rights" package.

And just where do our politicians think illegals will work, if the job market is falling off?

With all their kids I'm sure they'll be scarfing up the public assistance and everything else and robbing us blind in their spare time. Their Latino advocate groups will be fighting for "their" rights while we're stuck trying to survive with higher taxes.

Anyone who did not see this coming has been sleeping. The ecomony is on the edge of a cliff. This is one of the things that will keep me up at nights.

This is one of the things that will keep me up at nights

Same here....

The other day someone said something on a thread about raising the prices of all the cheap Chinese goods and we'd be over after that. Well....went to a Deals store here. Used to be everything in the store was a buck. My daughter is a camp counselor and has to buy token surprises as rewards for the kids in her group. So, I've been sending her a box from time to time of these dollar goodies so she doesn't have to bust her bank on this job. Well......the store is still there but forget getting anything for a buck!! Some is way more expensive than buying it in any other store!! Won't be long till it will be another empty building.

Anyone who did not see this coming has been sleeping.

Yep. My sister came down hard on me when I told her this was coming. She said I had no clue about how the economy works. Well, Sis, guess what......