NYT: Rising wages may point to rate increases

Via the New York Times: 

Wages climbed at a rapid pace in the year through March and the unemployment rate dropped notably last month, signs of a hot labor market that could keep pressure on the Federal Reserve as it contemplates how much and how quickly to cool down the economy.

The central bank is trying to slow demand to a more sustainable pace at a moment when inflation is running at its fastest pace in 40 years. Fed officials began raising interest rates in March and have suggested that they may increase rates by half a percentage point in May — twice as much as usual. Making money more expensive to borrow and spend can slow consumption and eventually hiring, tempering wage and price growth.

Friday’s employment report could bolster the case for at least one half-point increase.

Wages have picked up by 5.6 percent over the past year, the report showed, a far quicker pace than the 2 to 3 percent annual pay gains that were typical during the 2010s. At the same time, the jobless rate fell, to 3.6 percent in March from 3.8 percent in February. Unemployment is now just slightly above the half-century lows it had reached before the pandemic...

My bias/previous prediction is that the broad labor market will be less hot in fall of 2022 than it was in the fall of 2021, and stories like these do not change my mind. If wages continue to increase (especially in chemistry!), then this would be an indication that my prediction was incorrect.