Have you heard of Employment Cost index (ECI)? While the Atlanta Fed uses this to calculate wage growth and they claim that wages are growing… I know this is just another number put out by the Fed but if we want to believe it has some truth then this is one of the aspects of the stagflation that Chris Temple (along with a number of other people) claims we are experiencing.
Click here to visit the Atlanta Fed website where this was posted. Also read below to see what Tim Iacono has to say.
A measure of 12-month wage growth constructed here at the Atlanta Fed increased by 3.3 percent in April. This rate is up from 3.1 percent in March and at its highest level since March 2009 (see the chart).
As mentioned in an earlier macroblog post, this measure behaves broadly like the wage and salary component of the Employment Cost index (ECI). The ECI data pertain to the last month in the quarter and are published with about a four-week lag. In contrast, the Atlanta Fed measure uses individuals’ hourly wage data, 12 months apart, from the Current Population Survey (CPS). The data come from publicly available CPS microdata produced by the U.S. Bureau of Labor Statistics (BLS) and are typically released two or three weeks after the monthly BLS labor report.
Timeliness is one thing, but is it useful? It turns out there is a relatively strong correlation between this wage growth measure and the employment rate (100 minus the unemployment rate) lagged by 12 months (see the chart).
At least in terms of this measure of wage growth, it seems that improvement in labor utilization is translating into rising wage growth. This development is something our boss, Atlanta Fed President Dennis Lockhart, has been looking for. We expect to be able to update this wage growth measure with the May CPS data in a few weeks.
— Here is what our friend Tim Iacono has to say about this—
One of the many positive bits of data from Friday’s labor report was that average hourly earnings jumped 0.3 percent from April to May and are now 2.3 percent higher from a year ago, the biggest annual gain since 2009. In this item at the Atlanta Fed’s macroblog blog, they find an even more inspired upward trend when looking at the 3-month average.
Naturally, it will be important to see how this plays out over the summer since, in recent years, rising wages have been one of the key missing ingredients to a more robust (and much more interesting, inflation-wise) recovery.
DOLLAR DOWN ….1.16……..GOLD DOWN…….WHAT A JOKE………