Wages and benefits for U.S. workers increased 1 percent in the period between October and December. The gains were sizable by historical standards but slower than the 1.2 percent jump in the previous three months, according to the Bureau of Labor Statistics's employment cost index.
Quarterly wage gains usually don't pass 1 percent but were consistently higher through 2022, as a tight labor market pushed many employers to sweeten the deal for workers. In the first quarter of 2022, worker compensation was up 1.4 percent, the biggest gains since 2001.
Those gains began to slow in the final months of the year, however. While private industry wages were still up 5.1 percent in December from a year earlier, the year-over-year rate for wage gains is down significantly from its 2022 peak of 11.39 percent.
Now the big question for economists is what this means for interest rates.
The Federal Reserve watches the index closely and in recent months, as goods inflation has fallen, has emphasized more the role of the labor market in driving prices. Whether this analysis is correct or not, slowing wage gains could encourage the Fed to pull back on rate hikes. Echoing the Fed, some economists have drawn a straight line between wage growth and inflation.
"Good news for prospects for sustained lower inflation from the latest Employment Cost Index (ECI) data," tweeted Jason Furman, former director of the National Economic Council of the United States. "But, the growth in Q4 was still higher than *any* quarter in the previous cycle. So still not likely to be compatible with 2% inflation and probably not even 3% inflation."
Other economists have pushed back against the conclusion that wages are fueling price gains.
“The key message here is that Chair Powell’s oft-expressed fear of the risk of a wage-price spiral is no longer realistic," said Pantheon Macroeconomics in a research brief.
The central bank's Federal Open Market Committee (FOMC) is currently meeting to discuss its next rate hike, and Powell is scheduled to announce the decision Wednesday afternoon.
A big-screen adaptation of the anime “Chainsaw Man” has topped the North American box office, beating a Springsteen biopic and “Black Phone 2.” The movie earned $17.25 million in the U.S. and Canada this weekend. “Black Phone 2” fell to second place with $13 million. Two new releases, the rom-com “Regretting You” and “Springsteen — Deliver Me From Nowhere,” earned $12.85 million and $9.1 million, respectively. “Chainsaw Man – The Movie: Reze Arc” is based on the manga series about a demon hunter. It's another win for Sony-owned Crunchyroll, which also released a “Demon Slayer” film last month that debuted to a record $70 million.
The Federal Aviation Administration says flights departing for Los Angeles International Airport were halted briefly due to a staffing shortage at a Southern California air traffic facility. The FAA issued a temporary ground stop at one of the world’s busiest airports on Sunday morning soon after U.S. Transportation Secretary Sean Duffy predicted that travelers would see more flights delayed as the nation’s air traffic controllers work without pay during the federal government shutdown. The hold on planes taking off for LAX lasted an hour and 45 minutes and didn't appear to cause continued problems. The FAA said staffing shortages also delayed planes headed to Washington, Chicago and Newark, New Jersey on Sunday.
Boeing workers at three Midwest plants where military aircraft and weapons are developed have voted to reject the company’s latest contract offer and to continue a strike that started almost three months ago. The strike by about 3,200 machinists at the plants in the Missouri cities of St. Louis and St. Charles, and in Mascoutah, Illinois, is smaller in scale than a walkout last year by 33,000 Boeing workers who assemble commercial jetliners. The president of the International Association of Machinists says Sunday's outcome shows Boeing hasn't adequately addressed wages and retirement benefits. Boeing says Sunday's vote was close with 51% of union members opposing the revised offer.
The stunning indictment that led to the arrest of more than 30 people — including Miami Heat guard Terry Rozier and other NBA figures — has drawn new scrutiny of the booming business of sports betting in the U.S. The multibillion-dollar industry has made it easy for sports fans — and even some players — to wager on everything from the outcome of games to that of a single play with just a few taps of a cellphone. But regulating the rapidly-growing industry has proven to be a challenge. Professional sports leagues’ own role in promoting gambling has also raised eyebrows.
Tesla, the car company run by Elon Musk, reported Wednesday that it sold more vehicles in the past three months after boycotts hit hard earlier this year, but profits still fell sharply. Third-quarter earnings fell to $1.4 billion, from $2.2 billion a year earlier. Excluding charges, per share profit of 50 cents came in below analysts' estimate. Tesla shares fell 3.5% in after-hours trading. Musk said the company's robotaxi service, which is available in Austin, Texas, and San Francisco, will roll out to as many as 10 other metro areas by the end of the year.
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