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BOTTOM LINE: Unit Labor Costs, which account for about two-thirds of the cost of goods and services, rose 2.1% quarter-over-quarter in the fourth quarter. This is below the long-term average of 3.1%. Moreover, over the last three quarters unit labor costs have been falling at a .3% rate on average. In my opinion, if it were not for the current bubble in commodity prices, investors would be much more concerned about the potential for deflation rather than problematic inflation.
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