Making gains
A Labor Department report on Friday revealed that the US job market is looking healthier than many had predicted, with the economy adding 216,000 jobs, leaving the unemployment rate unchanged at a near-record low of 3.7%.
But, of course, the number of workers is only one side of the equation; the other — arguably more important — question is whether the pay at your job is keeping up with inflation. For much of the last 2 and a half years, the answer for many was no.
Indeed, overall inflation outstripped pay rises in every month from April 2021 to early 2023. That started to change in earnest last summer, as employees’ pay packets began to outgrow inflation, resulting in “real” wage gains for the first time in 2 years. Annual wage growth hit its 2023 peak in July at 5.1%, and it hasn’t fallen below the inflation rate since, with the latest reading showing average hourly wages up 4.1% year-over-year.
The solid jobs report suggests that the US economy perhaps doesn’t need more stimulus. In the final months of last year, a consensus emerged that the Federal Reserve might embark on a series of rate cuts, following years of hikes. However, the strong economic data has tempered those expectations, with traders revising the likelihood of cuts in March from 100% to ~70% last week.
