More and more of the Fed's business contacts are talking about wage pressure

Bank of America Merrill Lynch came up with an interesting anecdotal measure of possible wage pressures in the near future: They counted up the number of references to increasing wage pressures in the Federal Reserve’s Beige Book, a summary of regional economic conditions in each of the twelve Fed districts published eight times per year.

It appears that references to increasing wage pressure might be becoming more frequent in the Fed’s informal, anecdotal analyses, with seven such references in the most recent Beige Book from April, although there were references to wage pressures going back to 2011. Regarding the latter, the Bank of America Merrill Lynch researchers note,

“However, it seems implausible to us that these bottlenecks were of macroeconomic significance in 2011 when every official measure of slack suggested ample spare capacity. This makes it hard to determine whether this is more than the usual job mismatching that always exists.”

While most observers should probably still focus on official statistical indicators like average hourly earnings in the monthly jobs report and the Employment Cost Index, it’s also fun to look at what the Fed’s regional directors are seeing in their districts.

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