Capitol Report: If the Fed doesn’t hike rates, it will be due to one of these charts
Yellen pretty much conceded the picture on wages may not improve for some time.
“We could see nominal wage growth eventually running notably higher than the current roughly 2% pace. But the outlook for wages is highly uncertain even if price inflation does move back to 2% and labor market conditions continue to improve as projected,” she said.
“For example, we cannot be sure about the future pace of productivity growth; nor can we be sure about other factors, such as global competition, the nature of technological change, and trends in unionization, that may also influence the pace of real wage growth over time. These factors, which are outside of the Federal Reserve’s control, likely explain why real wages have failed to keep pace with productivity growth for at least the past 15 years.”
The chart here shows annual wage growth for production and nonsupervisory workers; it’s slightly less when all private-sector workers are included.