The Fed is meeting in two weeks, and wage growth is one of the things fed chair Janet Yellen and her peers will be looking for as they decide whether or not to raise interest rates for the first time this year.
Wage growth since the Great Recession has remained fairly low, hovering around just 2%. This is most likely not high enough to support the Fed’s stated inflation target of 2% year-over-year.
Over the past few months, wage growth has happened at a somewhat faster rate than this, reaching a postcrisis high of 2.5% in December, January, and April.
According to the May jobs report, average hourly earnings grew by 2.5% over the last year, holding steady from last month.