Tuesday, July 16, 2024
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Real wage growth and inflation outlook


exist MarketPlace by Justin Ho, yesterday. I pointed out that wage growth (on a 12-month basis) still outpaced inflation.

figure 1: Year-over-year growth in average hourly earnings for private sector production and non-supervisory workers, adjusted for the Consumer Price Index (blue), leisure and hospitality services (tan), and median hourly earnings for all workers (green). Source: Bureau of Labor Statistics, Atlanta Fed Wage Growth Trackerand the author’s calculations.

As a result, wages have risen faster than consumer prices over the past year, although not over the shorter three-month period. If wages matter for service prices, and services inflation is more persistent than goods inflation, should we be worried?

October Atlanta Federal Reserve Business Inflation Forecast The survey indicator for unit costs (not quite the same as unit labor costs) for the next 12 months was 2.4%, down from 3.1% in March.September New York Fed Consumer Expectations Survey (Median) applies to inflation of 3.7%. So while wage growth is likely to continue, it’s unclear whether a second round of the wage-price spiral will become the dominant factor.



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