By Selina Stoller, Summit Consumer Receivables Acquisitions, LLC
White House economic advisor Larry Kudlow believes the U.S. economy is keeping up the momentum.
“The economic boom continues,” he said on CNBC, citing the August jobs reports and the month’s wage gain data. “It’s the big story of 2018. Jobs, growth, wages. It doesn’t get much better than that.”
Average hourly earnings jumped by 2.9 percent, above the 2.7 percent increase expected while the unemployment rate held near a generational low of 3.9 percent.
The August jobs report came in above expectations with the U.S. economy creating 201,000 nonfarm payroll jobs versus the 191,000 estimate from economists surveyed by Reuters.
Wage growth numbers posted its biggest increase of the economic recovery in August while payroll gains also beat outlooks. Wage growth is the highest since April 2009.
The biggest contributor to job gains was professional and business services – adding 53,000 jobs. Healthcare grew by 33,000 jobs, wholesale trade rose by 22,000 jobs, and transportation and warehousing contributed 20,000 jobs to the total count.
Last month, the government said GDP grew at a 4.2 percent annualized rate in the second quarter, the fastest pace in nearly four years.
But all this economic growth could be followed by rate hikes.
“If we continue to see wage growth move higher, it puts the Fed in play for a fourth rate hike, absent tariff concerns,” said Quincy Krosby, chief market strategist at Prudential Financial.
Average hourly earnings increased 10 cents for the month to $27.16. The metric is closely watched as an inflation gauge at a time when the Federal Reserve has been raising interest rates to guard against runaway cost pressures.
Many experts expect the Fed to hike its benchmark rate another quarter point in September and likely add one more increase in December.
Reports overall indicate one of the greatest labor market recovery periods of all time with the economy impressively creating new jobs and wage rates finally rising.
- 12 Sep, 2018
- Josh Smith