Jeffry Bartash of MarketWatch tells his readers how rising wages and benefits could keep inflation elevated. Bartash writes:
The cost of labor for U.S. companies accelerated in the first quarter at the fastest pace in a year and a half, complicating the Federal Reserve’s effort to get inflation fully under control.
The employment cost index rose 1.2% in the first three months of the year from 0.9% in the fourth quarter, the government said Tuesday.
That was the biggest increase since the 2022 third quarter and exceeded the 1% forecast of economists polled by The Wall Street Journal. […]
Big picture: Compensation is still rising at levels that could make it harder for the Fed to get inflation down to its 2% goal.
The rate of inflation ranges from 2.7% to 3.5% depending on the measure.
The Fed finishes a two-day meeting on Wednesday. The central bank is not expected to cut interest rates until inflation begins to slow again. Prices have picked up in early 2024.
Looking ahead: “The persistence of wage growth is another reason for the Fed to take its time on rate cuts,” said Paul Ashworth, chief North American economist at Capital Economics.
Market reaction: The Dow Jones Industrial Average DJIA, 0.03% and S&P 500 SPX, -0.23% were set to open lower in Tuesday trading.
Read more here.
