Saturday, August 6, 2016

Jobs report July 2016 - wages uptick

It is good to see wages for the mass of workers going up.  It is a benefit to everyone.  It means the economy is doing well.  It appears wages are poised to start trending upwards.  Until wage growth gets to 4%, things will be improving.  It seems the economy has a ways to go before a recession.

Remember however that economist believe that inflation is a bad thing, which it is, and they believe wages are the problem that pushes up prices. "Cost push inflation".

Here is a chart showing the Federal Funds rate in red along with the annual increase in wages.  If wages start to trend upwards, the Fed is going to want to increase interest rates along with it.

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