“The Fed is closely tracking the data for signs of a wage-price spiral,” said Rubeela Farooqi, chief U.S. On Wednesday, the Fed lifted its benchmark interest rate to a range between 2.25% and 2.5%. Companies often pass on price increases to consumers to compensate for higher labor costs. The report showed that inflation as measured by the Federal Reserve’s preferred gauge, the personal-consumption expenditures price index, rose 6.8% in June from the year before, up from the 6.3% increase in the 12 months through May.Įconomists say the latest employment-cost figures are a discouraging sign for Federal Reserve officials as they try to bring four-decade high inflation down to their target of 2%. “Competition for workers remains fierce as employers have to keep bidding up wages for new hires.”Ī separate Commerce Department report Friday showed consumers boosted their seasonally adjusted spending by 1.1% in June, up from a revised 0.3% increase in May.
“The rest of the economy might be slowing down, but wages are speeding up,” saidĮconomist at jobs site Indeed. The growth in compensation shows that employers continued to seek workers and increase wages in a historically tight job market, even as the economy shrunk in the second quarter. Wages and salaries for private-sector workers accelerated, growing 1.6% in the spring versus 1.3% during the first three months of the year. Wages and benefits for civilian workers increased a seasonally adjusted 1.3% in the second quarter, a slight slowdown from record-high growth of 1.4% in the first quarter as employers pulled back on benefits this spring.
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