Just a quick follow up on the employment report.

Not only did wage growth come in weak, but the prior data was revised down.
People had been looking at the downward revisions of the personal income data
and expecting to to see employment revised down. But rather than employment,
it was average hourly earnings that were revised lower. In particular, look at
sharp slowdown for the three month growth rate.

Interestingly, the new experimental measure of average hourly earnings had
been reporting weaker wage growth. This revision bring the standard measure
down to what the experimental had been reporting.

This has significant negative implications for consumer spending prospects.

The slow down in wage growth should be expected as growth weakens.
Surprisingly, my estimate of inflation expectations — a moving average of
the last three years trailing headline CPI — is the main reason my equation
implies that wages should be higher. This suggest that labors ability to off-set
higher inflation with higher wages is weaker then it use to be.

But it also implies that the Fed is likely to continue cutting rates.