By all rights, U.S. wage growth should be kicking into a higher gear amid falling unemployment and intensifying worker shortages. Instead, annual pay increases have slowed this year.
Salary gains, which generally had been modest since the economic expansion began in 2009, finally edged over 3% in August 2018 and peaked at 3.4% in February before dropping back to 3% the past few months. The pullback in pay gains comes despite unemployment hitting a 50-year low of 3.5% in September.
Economists blame myriad factors, including President Donald Trump’s trade war with China and a slowing U.S. economy, weak productivity growth and meager inflation. Accelerating earnings increases were expected to drive consumer spending, helping offset slower job growth and keeping the economy humming in the expansion’s latter stages.
Three percent pay increases aren’t bad, but many analysts expected a march to 4% and beyond.
Paul Davidson, USA Today