JPMorganChase economists Michael Feroli, Bruce Kasman and Robert Mellman wrote in a report to clients (via WSJ).
It is important to recognize that significant change is taking place in U.S. labor markets that should alter perceptions and reverberate broadly across the macroeconomic landscape over the coming year.
The labor market is transitioning to strong job growth as business gradually shifts toward a stance of medium-term expansion that is more consistent with the current environment of elevated profit margins, strong corporate balance sheets, and relatively easy financing.
That said, they amazingly don't see the price inflation that is coming. They wrote, according to WSJ that inflation pressures are unlikely to arise from wage growth. This view, they said, underpins “our view that the Federal Reserve will be able to keep its policy rate on hold until 2014.”