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U.S. workers’ pay grew 0.4 percent in March, a gain over February’s feeble 0.1 percent rise, but still lower than the monthly 0.5-percent climb wages experienced over the preceding six months, The Wall Street Journal reported.
Wages overall were up 5.6 percent year on year last month, while U.S. inflation ran at an annual rate of 7.9 percent in February, taking a large share, if not all, of the additional purchasing power workers gained over the past 12 months.
The slowdown indicates that more people are returning to work, easing pressure on employers to dangle higher pay to attract employees.
The proportion of American adults either working or actively looking for a job reached 62.4 percent in March, the most in two years but still notably below 2019’s pre-COVID 63.6 percent.
Wages for construction labor rose 6.2 percent in March, the largest annual boost in almost 40 years. In transport and warehousing, the annual wage gain was 11.1 percent, the most since the U.S. labor department began keeping track in 1973.
Pay for leisure and hospitality workers rocketed up 14 percent but the rate of increase has slackened for the past three consecutive months, the WSJ noted.
TREND FORECAST: The U.S. Federal Reserve will not be bold enough to raise interest rates high enough to tame inflation. To do that, rates should be close to 7 percent now, more than 10 times what they are.
However, a hike of several hundred basis points over a few months, as we have forecast, will shock the economy into recession or worse, a fate the Fed will want to avoid.
Instead, U.S. households will see their purchasing power continue to disappear until the economy finds its own way to a recession, then Dragflation, which we have named as a Top 2022 Trend.