Wage growth fastest since 2009

The Bureau of Labor Statistics on Friday reported that growth in Average Hourly Earnings (AHE) accelerated at 3 percent on a year over year basis in October — its quickest pace since 2009. This is important because policymakers and investors are looking for some evidence that inflation is quickening, which would confirm that activity in the US economy remains robust and supportive of more rate hikes by the Fed.

While this week’s earnings release suggests that the economy remains sure-footed (for now) and that the Fed’s expected rate hike next week won’t likely be mistimed, the single data point is just data: one data point. What we would need to see for confirmation of labor cost related inflationary pressures taking hold is persistence of wage inflation over the coming year. Such an outcome may become more challenging as headwinds to economic growth gain pace in 2019. For now, we view the report at a market positive.

About the Author

FMA|Perspectives
Helping people get ahead in life by simplifying complex financial stuff

Be the first to comment on "Wage growth fastest since 2009"

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.