As we come closer to the final Federal Reserve meeting of the year on December 15-16, everyone is watching to see if Chairwoman Janet Yellen and her peers are going to finally end the seven-year long era of zero interest rate targets.
Chairwoman Yellen has made clear repeatedly that she is eager to raise rates so long as the labour market appears ready to support that. A big part of that labour market strength would show up in average hourly wage growth numbers.
Wage growth since the Great Recession has remained fairly low, hovering around just 2%. This is likely not high enough to support the Fed’s stated inflation target of 2% year over year. Last month’s jobs report showed some improvement, with wages rising 2.5% over the prior year.
Wage growth was slightly lower in the November jobs report, with the average hourly wage rising 2.3% between November 2014 and November 2015. This is still a little higher than what we’ve seen in previous years, however: