Wage Growth Slows Slightly But Remains Elevated, Presenting Ongoing Challenge for Fed
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The Employment Cost Index, a measure of wages and benefits, grew 1.1% in Q3 2023, slightly faster than expected but down from previous quarters.
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On a yearly basis, wage gains measured by the ECI continue to slow to 4.3%, down from 4.5%, though still fast historically.
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Rapid wage gains could present a challenge for the Fed as they try to reduce inflation.
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The Fed is closely monitoring wages as they want to see the labor market cool to more normal levels before stopping interest rate hikes.
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Other wage measures like average hourly earnings have moderated more quickly than the ECI, but the ECI avoids some data issues, so Fed watches it closely.