Note: The nominal wage target of 4 percent is defined as nominal wage growth consistent with the Federal Reserve’s 2 percent overall price inflation target, 2 percent productivity growth, and a stable labor share of income. As an example, if trend productivity growth is 2 percent, this implies that nominal wage growth of 2 percent puts zero upward pressure on overall prices; while an hour of work has gotten 2 percent more expensive, the same hour produces 2 percent more output, so costs per unit of output are flat. Nominal wage growth of 4 percent with 2 percent trend productivity growth implies that labor costs would be rising 2 percent annually—and if labor costs were stable as a share of overall output, this implies prices overall would be rising at 2 percent, which is the Fed’s price growth target.