Some analysts look to other explanations. While wage growth is running below the peak of previous expansions, the figures may be depressed by weak productivity and the retirement of high-earning Baby Boomers, according to economist Stephen Stanley of Amherst Pierpont Securities LLC. He doesn’t quite buy the shadow-slack view.
“We’re at a point now where the bulk of that activity has probably happened,” Stanley said. “If you look at the number of people who said they were not in the labor force but still wanted to work, it’s come off a lot in the past year.”
The labor flows data also come with some caveats. The jump in those coming into the workforce and finding employment may have partly reflected a new graduating class and the summer’s seasonal workers -- some likely welcomed by employers who are struggling to fill open positions.
While wages were a weak spot in the June report, it still marked a relatively strong finish for the labor market in the second quarter. That should support continued gains in consumer spending in the coming months and probably keep the Fed on track with plans to start reducing their balance sheet and increase borrowing costs once more this year.
This report bolsters the view that the economy is “still on solid footing,” UBS Group AG economists led by Seth Carpenter said in a note today.
“The Fed has noted that they have essentially achieved full employment and are forecasting a pickup in inflation,” Carpenter wrote. “As we see it, this report will not change their minds on what to do with policy.”
This article was provided by Bloomberg News.