Will Higher Wages Lead to Higher Inflation?

By The Conference Board, Special for  USDR

Employment increased by 156,000 in December after increasing by an upwardly revised 204,000 jobs in  November.

Since the election, financial markets and surveys of business and consumer confidence have showed growing optimism about short-term growth prospects of the U.S. economy. But it’s too early to see this optimism in December’s job growth number, which reflects a continuation of a moderate employment growth  trend.

As expected, the unemployment rate increased slightly in December following a large drop in November. But in a solid job growth environment, the unemployment rate is clearly trending  down.

Over the past 12 months, average hourly earnings grew by 2.9 percent, a new record for this expansion. With the labor market tightening faster than pre-election expectations, wages and prices may accelerate, leading the Fed to raise interest rates faster than the market currently  expects.

About The Conference  Board
The Conference Board is a global, independent business membership and research association working in the public interest. Our mission is unique: To provide the world’s leading organizations with the practical knowledge they need to improve their performance and better serve society. The Conference Board is a non-advocacy, not-for-profit entity holding 501 (c) (3) tax-exempt status in the United States.  www.conference-board.org

SOURCE The Conference  Board

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