A week ago I criticized an article in the Economist, which saw a "puzzle" in the co-existence of low unemployment and sluggish wage gains. I said there was no puzzle, as wage growth was slow because nominal GDP growth was slow. The labor market can eventually adjust to almost any (reasonable) trend rate of growth in NGDP. Now the Economist has responded, and in doing so has somewhat misinterpreted my position. That's actually not their fault--my post was very terse and the nuances of this issue are quite subtle, with many different interpretations. For instance, take their concluding paragraph: Janet Yellen's ... (full story)