Current:Home > InvestUS wages rose at a solid pace this summer, posing challenge for Fed’s inflation fight -Blueprint Money Mastery
US wages rose at a solid pace this summer, posing challenge for Fed’s inflation fight
View
Date:2025-04-12 04:36:58
WASHINGTON (AP) — Wages and benefits grew at a slightly faster pace in the July-September quarter than the previous three months, a benefit for workers but a trend that also represents a risk to the Federal Reserve’s fight against inflation.
Compensation as measured by the Employment Cost Index increased 1.1% in the third quarter, up from a 1% rise in the April-June quarter, the Labor Department said Tuesday. Compared with a year ago, compensation growth slowed to 4.3% from 4.5% in the second quarter.
Adjusted for inflation, total compensation rose 0.6% in the third quarter compared with a year earlier, much slower than the second-quarter increase of 1.6%.
By some measures, average pay cooled, economists pointed out. Wages and salaries for private sector workers, excluding those who receive bonuses and other incentive pay, rose 0.9% in the third quarter, down from 1.1% in the previous period.
Fed officials consider the ECI one of the most important measures of wages and benefits because it measures how pay changes for the same mix of jobs, rather than average hourly pay, which can be pushed higher by widespread layoffs among lower-income workers, for example.
Growth in pay and benefits, as measured by the ECI, peaked at 5.1% last fall. Yet at that time, inflation was rising much more quickly, reducing Americans’ overall buying power. The Fed’s goal is to slow inflation so that even smaller pay increases can result in inflation-adjusted income gains.
Fed Chair Jerome Powell has indicated that pay increases at a pace of about 3.5% annually are consistent with the central bank’s 2% inflation target.
While higher pay is good for workers, it can also fuel inflation if companies choose to pass on the higher labor costs in the form of higher prices. Companies can also accept lower profit margins or boost the efficiency of their workforce, which allows them to pay more without lifting prices.
veryGood! (42)
Related
- Louvre will undergo expansion and restoration project, Macron says
- The 40 Most Popular Amazon Items E! Readers Bought Last Month
- What’s streaming this weekend: Indiana Jones, Paris Hilton, Super Mario and ‘Ladies of the 80s’
- Why is George Santos facing an expulsion vote? Here are the charges and allegations against him
- Off the Grid: Sally breaks down USA TODAY's daily crossword puzzle, Triathlon
- Cowboys vs. Seahawks Thursday Night Football highlights: Cowboys win 14th straight at home
- Macaulay Culkin and Brenda Song's Sons Make First Public Appearance at Hollywood Walk of Fame Ceremony
- Pet wolf hybrid attacks, kills 3-month old baby in Alabama
- McConnell absent from Senate on Thursday as he recovers from fall in Capitol
- Ryan Cabrera and WWE’s Alexa Bliss Welcome First Baby
Ranking
- DeepSeek: Did a little known Chinese startup cause a 'Sputnik moment' for AI?
- Somalia president hails lifting of arms embargo as government vows to wipe out al-Shabab militants
- Virginia Environmental Groups Form New Data Center Reform Coalition, Call for More Industry Oversight
- Michael Latt, advocate and consultant in Hollywood, dies in targeted home invasion
- Travis Hunter, the 2
- Republicans say new Georgia voting districts comply with court ruling, but Democrats disagree
- Court pauses federal policy allowing abortion clinic operators to get grants -- but only in Ohio
- Why are we so bummed about the economy?
Recommendation
Israel lets Palestinians go back to northern Gaza for first time in over a year as cease
Registration open for interactive Taylor Swift experience by Apple Music
70-year-old Ugandan woman gives birth to twins after fertility treatment
Ukrainian spy agency stages train explosions on a Russian railroad in Siberia, Ukrainian media say
Sam Taylor
California officers work to crack down on organized retail crime during holiday shopping season
Where to watch National Lampoon's 'Christmas Vacation': Streaming info, TV airtimes, cast
The Bachelor Alum Matt James’ Holiday Gift Ideas Will Impress Any Guy in Your Life