Here we go again. The recent rise in wage inflation, having become an obvious fact, is increasingly being used to support the case for rate hikes - including by Fed Chairman Janet Yellen, who now sees these "tentative signs of stronger wage growth" as a harbinger of inflation.
Last year, when this notion first surfaced, we had disagreed, recalling Sherlock Holmes's dictum that "there is nothing more deceptive than an obvious fact." As before, the recent details of the data lead us to question the consensus.
The chart shows that year-over-year (yoy) growth in nominal average hourly earnings (AHE) has indeed risen to a five-and-a-half-year high, though just barely so (blue line). But, as in 2014, it has risen only because growth in hours (gold line) has fallen faster this year than pay growth (purple line). We would not call this "a hopeful sign" for wage earners.
Econintersect wants your comments,
data and opinion on the articles posted. As the internet is a
"war zone" of trolls, hackers and spammers - Econintersect must balance its
defences against ease of commenting. We have joined with Livefyre
to manage our comment streams.
To comment, using Livefyre just click the "Sign In" button at the top-left corner of
the comment box below. You can create a commenting account using your
favorite social network such as Twitter, Facebook, Google+, LinkedIn or
Open ID - or open a Livefyre account using your email address.
You can also comment using Facebook directly using he comment block below.
Print this page or create a PDF file of this page
The growing use of ad blocking software is creating a shortfall in covering our fixed expenses. Please consider a donation to Econintersect to allow continuing output of quality and balanced financial and economic news and analysis.
Take a look at what is going on inside of Econintersect.com