Wage Inflation Is Coming

The inflation warning signs are really piling up.

Last week, Deustche Bank economist Torsten Slok circulated a stack of charts showing that wage growth is about to pick up.

From Slok:

“Those who say that there is no wage pressure are not looking at the data. The Fed looks at five different measures of wages: Average hourly earnings for all workers, Average hourly earnings for nonsupervisory workers, Employment Cost Index, Median usual weekly earnings, and Unit labour costs. One year ago all of these measures were flat and there was no sign anywhere of rising wage inflation. Today, 2-3 of these measures are on a clear uptrend, see charts below. This is not surprising given the labour market continues to tighten, including in the JOLTS data yesterday and NFP last week. Or put differently, if there really is so much slack in the labour market why are any of these wage measures then trending higher?”

Check out the charts:

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