Strong US Job Market , May Be Cooling With Slower , Growth in Pay and Benefits.
In the last three months of 2023, pay and benefits
for workers in the United States grew at
the slowest pace in two and a half years. .
ABC reports that the trend could impact
the Federal Reserve's decision regarding
when interest rates can start to be cut. .
In the October-December quarter,
the government's Employment
Cost Index (ECI) rose just 0.9%.
That figure is down from
1.1% in the previous quarter. .
Compared to the same time in
2022, compensation growth
slowed from 4.3% down to 4.2%.
ABC reports that economists have suggested
that slowing wage gains could encourage
the Fed to start cutting rates as early as March.
Other economic analysts have forecast
the first cuts to occur in May or June. .
The Fed considers the ECI to be one of the most
important gauges of earnings and benefits
because it offers a measure of "how pay changes
for the same sample of jobs," ABC reports. .
According to the ECI, growth in pay
and benefits peaked at 5.1%
back in the fall of 2022.
At the time, inflation was still on
the rise, reducing the overall
buying power of U.S. consumers.
ABC reports that the Fed is looking to slow
inflation enough to make smaller pay increases
result in larger, inflation-adjusted income gains