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.
Joe Cecela, Dream Exchange CEO, explains how they are aiming to form the first minority-controlled company to operate an exchange in U.S. history. Watch!
A Michigan judge is putting sponges in the hands of shoplifters and ordering them to wash cars in a Walmart parking lot when spring weather arrives. Genesee County Judge Jeffrey Clothier hopes the unusual form of community service discourages people from stealing from Walmart. The judge also wants to reward shoppers with free car washes. Clothier says he began ordering “Walmart wash” sentences this week for shoplifting at the store in Grand Blanc Township. He believes 75 to 100 people eventually will be ordered to wash cars this spring. Clothier says he will be washing cars alongside them when the time comes.
The State Department had been in talks with Elon Musk’s Tesla company to buy armored electric vehicles, but the plans have been put on hold by the Trump administration after reports emerged about a potential $400 million purchase. A State Department spokesperson said the electric car company owned by Musk was the only one that expressed interest back in May 2024. The deal with Tesla was only in its planning phases but it was forecast to be the largest contract of the year. It shows how some of his wealth has come and was still expected to come from taxpayers.
At 100 years old, the Goodyear Blimp is an ageless star in the sky. The 246-foot-long airship will be in the background of the Daytona 500 — flying roughly 1,500 feet above Daytona International Speedway, actually — to celebrate its greatest anniversary tour. Even though remote camera technologies are improving regularly and changing the landscape of aerial footage, the blimp continues to carve out a niche. At Daytona, with the usual 40-car field racing around a 2½-mile superspeedway, views from the blimp aptly provide the scope of the event.
You'll just have to wait for interest rates (and prices) to go down. Plus, this deal's a steel, the big carmaker wedding is off, and bribery is back, baby!
