This is a

This is CBS I on the world with John Bachelor.

Here's John Bachelor

The American Economy.

I welcome Elizabeth Peek, who writes at the Hill a column,

at Fox News a column much on Fox Business.

Inflation is the villain. Where, where is the villain.

Where, where is that villain striking next?

We go to Bloomberg a headline in these last hours.

U.S. labor costs rise by most in year and sign of wage pressure, subhead.

The advance in the Employment Cost Index succeeded all projections in a Bloomberg survey of economists.

Liz, a very good evening to you.

No one likes to hear that all projections were exceeded when it is this unhappy.

But U.S. labor costs are a direct result of the skill set being sought after by many

employers, the want of employees, and at the same time inflation comes from wages is the theory. Now that's

an old theory 20th century is it still applicable here? Do wage pressures translate into more inflation, not

less? Good evening to you.

Good evening, John. I think absolutely the answer to that question is yes I mean think about it if you're a

company and you have to up the wages you're paying your workers obviously you're

going to try and recoup that via price hikes and you know it becomes a vicious circle and I have to say as you are

aware wages have not gone up as quickly as people had expected given the fact that the job market is tight and that this

vicious circle is in play that is to say companies are fighting higher costs

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