Real wages continued to stall
Real wages continued to stall in January, portending a consumer slowdown, but don’t reverse
Let me follow up on yesterday’s post about the January CPI by talking about “real” wages.
Since both average real hourly wages and consumer inflation increased in January by 0.6%, real hourly wages for non-supervisory workers were flat month over month:
Real wages have been essentially flat since June 2020, with the exception of last winter and September. That isn’t good, but it isn’t recessionary either.
Now let’s turn to real aggregate payrolls, which are an overall measure of consumer health. These declined by -0.3% for the month. But, due to the annual revisions in the household survey from which they are derived, December 2021 was their new all-time high:
For the past 50+ years, only when aggregate real wages have retreated from peak for 3 to 9 months, has recession typically followed:
So, a blip, but not bad news.
The conclusion I have written for the previous 2 months continues to be true now, with only slight modifications: while real wage growth has halted, depending on which measure we use, it has not gone into reverse. This is consistent with taking a near term recession off the table for now. On the other hand, we certainly are at a point where a deceleration beginning with the consumer sector of the economy is more likely than not.
there’s a widespread belief that so called ‘labor shortages’ could be solved if the companies who are short workers would only offer higher wages…but no matter how much you increase wages, some spots are going to remain unfilled…two weeks ago, the BLS reported job openings increased to 10,925,000 in December, 61.8% higher than in December a year ago…they also reported non-farm payrolls were 2,875,000 jobs below those now indicated for February 2020, our jobs peak…no telling how many those working in February 2020 were among the 900,000+ Americans who died of Covid since, but for argument’s sake lets’s say they’re all still healthy & available…,another BLS survey the same week showed the population of those over 16 had increased by 3,574,000 since February 2020 (i’m including the 1,066,000 upward revision to population also reported at that time https://fred.stlouisfed.org/series/CNP16OV
so by my arithmetic, than means there will still be 4,476,000 job openings that can’t be filled at whatever price, simply because of a shortage of warm bodies…