US Wage Growth, Once An Inflation Risk, May Be The Prop A Soft Landing Needs  

• Recent data underscores the strength of the labour market, with a 4% annual increase in wages. Despite a slower pace of pay growth, the rate remains above the 3% threshold considered consistent with the Federal Reserve's 2% inflation target.
• The growth in labour supply, marked by half a million more individuals engaged in employment or job-seeking, plays a crucial role in supporting economic expansion. Additionally, improvements in worker productivity and a decrease in average working hours have led to a decline in labour costs per unit of output.
• The Federal Reserve faces a delicate balancing act, hoping for a "soft landing" where inflation slows without triggering a recession. Despite concerns about high interest rates impacting consumer borrowing, ongoing job creation and rising wages contribute to increased consumer spending.
• However, there are expectations of a potential slowdown in spending in 2024 as pandemic savings diminish. The Fed remains vigilant about the sustainability of these positive economic dynamics in the face of changing conditions.

(Source: Reuters)