Data in February showed core PCE inflation is up 1.7%, which would be just below the Fed’s target of 2%. However, Deutsche Bank economist Joseph Lavorgna believes that the recent pickup in core inflation is temporary because it has not occurred alongside any noticeable increase in wage pressures.
He highlights that average hourly earnings, the employment cost index and worker compensation have all been trending sideways.
Continue reading “Tame Wage Pressure Suggests Inflation Pickup Only Temporary”
California became the first state in the nation to commit to raising the minimum wage to $15 per hour statewide.
Under the plan, minimum wage will rise to $10.50 per hour on January 1, 2017 for businesses with 26 or more employees, and then rises each year until reaching $15 per hour in 2022.
Amid the news it will be important the bookmark the February 2016 unemployment stats (below) as a benchmark:
Basic economics says the unemployment rate will likely go up from here, that is if the labor force stays the same. As jobs dry up, those on the margin tend to leave the labor force all together and get on the welfare rolls – thus allowing the government to fudge the unemployment rate number.