Tags: ATTACHMENT | BB | BBCHTO | BGOVBILLGO | BGOVCODES | BIZNEWS | BNALL

Higher Wages Will Make Rate Rise an Easier Decision for Yellen

Friday, 06 Nov 2015 12:42 PM

Janet Yellen should be feeling better now about the U.S. economy.

Aside from a getting an October jobs report that exceeded just about everyone’s expectations, the Federal Reserve chair saw evidence in Friday’s monthly payrolls update that workers are finally getting some of the wage increases that have long eluded them in the tepid U.S. recovery.

Average hourly earnings climbed 2.5 percent in the 12 months through October, the most since July 2009. Wage growth had been stuck near 2 percent on average since the current expansion began that same month.

Stagnant wages have been a central concern among Fed officials and it’s connected to their worries over weak price pressures in general, which have languished below the central bank’s 2 percent inflation target for more than three years.

At a March press conference, while noting that higher wages weren’t a precondition for raising interest rates, Yellen said she and her colleagues had their eyes on wage growth as they searched for signs that inflation might be poised to increase.

“If we did see wage growth pick up, that would be at least a symptom that inflation would move up over time,” Yellen said back then.

Carl Tannenbaum, chief economist at Northern Trust Corp. in Chicago, said the wage data released Friday will weigh heavily when the Fed decides whether to raise rates at the next meeting of the policy-setting Federal Open Market Committee on Dec. 15-16.

“Unless the November employment report is a real dud, or we have some significant international interruption, I think the Fed, as it’s been strongly hinting for the last week and a half, is going to take that step in December, absolutely,” he said.

Yellen told Congress on Wednesday that the U.S. economy was performing well and that a December rate hike is a “live possibility.” The U.S. central bank has held rates near zero since December 2008 to spur growth and hiring amid the worst recession since the Great Depression.

Roberto Perli, a partner at Cornerstone Macro LLC in Washington and former Fed Board economist, agreed that it could help officials feel more confident.

“They always said we don’t need to see a massive pickup in average hourly earnings, but it has to be reassuring,” he said.

To contact the reporters on this story: Christopher Condon in Washington at ccondon4@bloomberg.net; Jeanna Smialek in Washington at jsmialek1@bloomberg.net To contact the editors responsible for this story: Carlos Torres at ctorres2@bloomberg.net Alister Bull, Scott Lanman

© Copyright 2017 Bloomberg News. All rights reserved.

 
1Like our page
2Share
Archives
Higher Wages Will Make Rate Rise an Easier Decision for Yellen
ATTACHMENT, BB, BBCHTO, BGOVBILLGO, BGOVCODES, BIZNEWS, BNALL, BNCOPY, BNCOPY2, BON, BONDWIRES, BRNEWS, BUSINESS, CECO, CEN, CMDGLOMAC, CMDKEY, COS, CREDITKEY, DC, DCAA, DEBTKEY, ECO, ECOCUR, ECOCURZ1, ECOINDIC, ECOINDTEAM, ECOSTAT, ECOTOP, ECOTOPZ1, EQUITYKEY, ESG, ESGCOUNT, ESGLABOR, ESGRES, ESGSOC, FED, FEDCURZ1, FEDTOP, FEDTOPZ1, FIALL, FIASST, FINNEWS, FXKEY, G10MEMB, G7ECOS, G7MEMB, GBN, GLOBALMACR, GOV, GOVMISC, GOWEB, HLNOVEL, HLNOVELTY9, INF, LABOR, MAJOR, MARKETS, METALKEY, MISC, MSCINAMER, MSCIWORLD, NORTHAM, NOVEL, NOVELTY9, NRGKEY, OILKEY, ONWEB, ORIGINAL, PHOTO, POLIRISK, POLNEWS, RATESKEY, READ, READ25, READ50, REGIONFILT, SPREGIONS, SRCRANK1, STFILT241, STFILT689, TIMECO, TIMENI, TOP, US, USBNX, USECO, USGOV, WORLD
409
2015-42-06
Friday, 06 Nov 2015 12:42 PM
Newsmax Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved