##pating and, in some cases, reversing seems likely to play out in durables more generally. over the 25 years preceding the pandemic, durables prices actually declined, with inflation averaging negative 1. 9 percent per year ( figure 5 ). 9 as supply problems have begun to resolve, inflation in durable goods other than autos has now slowed and may be starting to fall. it seems unlikely that durables inflation will continue to contribute importantly over time to overall inflation. we will be looking for evidence that supports or undercuts that expectation. 3. wages we also assess whether wage increases are consistent with 2 percent inflation over time. wage increases are essential to support a rising standard of living and are generally, of course, a welcome development. but if wage increases were to move materially and persistently above the levels of productivity gains and inflation, businesses would likely pass those increases on to customers, a process that could become the sort of “ wage – price spiral ” seen at times in the past. 10 today we see little evidence of wage increases that might threaten excessive inflation ( figure 6 ). broad - based measures of wages that adjust for compositional changes in the labor force, such as the employment declines in used car prices would begin holding down 12 - month inflation once most of the earlier price increases have fallen out of the 12 - month window. the lower inflation in durable goods is probably due to a number factors, including faster productivity growth in durable goods than in services and globalization. if wages rise in line with inflation and labor productivity growth, then real unit labor costs ( or the labor cost of producing one unit of output ) to businesses are constant. wages may grow slower or faster than inflation plus productivity growth for extended periods because of changing structural factors without being reflected in inflation. ultimately, however, persistently rising real unit labor costs will put upward pressure on prices. - 7cost index and the atlanta wage growth tracker, show wages moving up at a pace that appears consistent with our longer - term inflation objective. we will continue to monitor this carefully. 4. longer - term inflation expectations policymakers and analysts generally believe that, as long as longer - term inflation expectations remain anchored, policy can and should look through temporary swings in inflation. our monetary policy framework emphasizes that anchoring longer - term expectations at 2 percent is important for both maximum employment and price stability. we carefully monitor a wide range of indicators of longer - term inflation expectations. these measures today are at levels

powell, jerome h. ( 2019 ). “ challenges for monetary policy, ” speech delivered at “ challenges for monetary policy, ” a symposium sponsored by the federal - 14 reserve bank of kansas city, held in jackson hole, wyo., august 23, https : / / www. federalreserve. gov / newsevents / speech / powell20190823a. htm. figure 1. spending on durable goods has surged, while spending on services remains weak 3. 2 trillions of chained 2012 dollars trillions of chained 2012 dollars 9. 0 8. 5 services ( right axis ) 2. 8 8. 0 7. 5 2. 4 7. 0 2. 0 6. 5 durables ( left axis ) 6. 0 1. 6 5. 5 1. 2 5. 0 note : the data are monthly estimates of real personal consumption expenditures and extend through june 2021. trend spending is shown by the dashed lines and is constructed using the average growth rates from january 2018 to january 2020. source : u. s. bureau of economic analysis. figure 2. the labor market is recovering, but the recovery is far from complete b. measures of unemployment a. change in nonfarm payrolls and total hiring thousands thousands percent monthly adjusted unemployment rate payrolls ( right axis ) hires ( left axis ) - 2000 - 4000 unemployment rate long - term unemployment rate - 6000 - 8000 note : payroll data are three - month moving averages of total nonfarm payroll employment and extend through july 2021. total private hire data are three - month moving averages and extend through june 2021. source : u. s. bureau of labor statistics. - 3 - 3 note : the data extend through july 2021. the long - term unemployment rate is the share of the labor force that has been unemployed for 27 weeks or more. the adjusted unemployment rate begins in february 2020 and is defined in footnote 5. source : u. s. bureau of labor statistics. figure 3. measures of broad - based inflation generally remain moderate monthly percent 18 - month total pce inflation ex. durable goods 18 - month core pce inflation ex. durable goods 12 - month dallas trimmed mean ( pce ) - 1 - 1 note : dallas trimmed mean data are 12 - month percent changes and extend through june 2021. inflation excluding durables are 18 - month annualized changes and extend through june 2021. source : federal reserve bank of dallas ; federal reserve board staff calculations. figure 4.