Economic Indicators | Jobs and Unemployment

News from EPI As Kids Head Back to School, What Grade Does the Economy Get?

As kids head back to school, the Bureau of Labor Statistics reported this morning that payroll employment increased by only 173,000 in August—lower than recent months, which were already showing slower growth than last year. And yet, while many pundits are quick to hand out A’s—encouraging the Federal Reserve to raise rates—a close look at the data shows that the economy is just barely showing up to class. Nominal hourly wage growth has continued to flutter around 2 percent. To earn an A, wage growth needs to be far stronger, in the 3.5 to 4.0 percent range, and for more than just one month. We need to see consistently stronger wage growth before the Federal Reserve considers action that would slow the economy. Current trends suggest nominal wage growth is only pulling down a C average. When the Fed meets later this month, they need to keep doing what they’ve been doing: wait to raise rates until we see a much stronger labor market recovery.

See related work on Jobs | Jobs and Unemployment

See more work by Elise Gould