Strong US Job Market May Be Cooling With Slower Growth in Pay and Benefits

Strong US Job Market , May Be Cooling With Slower , Growth in Pay and Benefits.

In the last three months of 2023, pay and benefits for workers in the United States grew at the slowest pace in two and a half years.

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ABC reports that the trend could impact the Federal Reserve's decision regarding when interest rates can start to be cut.

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In the October-December quarter, the government's Employment Cost Index (ECI) rose just 0.9%.

That figure is down from 1.1% in the previous quarter.

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Compared to the same time in 2022, compensation growth slowed from 4.3% down to 4.2%.

ABC reports that economists have suggested that slowing wage gains could encourage the Fed to start cutting rates as early as March.

Other economic analysts have forecast the first cuts to occur in May or June.

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The Fed considers the ECI to be one of the most important gauges of earnings and benefits because it offers a measure of "how pay changes for the same sample of jobs," ABC reports.

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According to the ECI, growth in pay and benefits peaked at 5.1% back in the fall of 2022.

At the time, inflation was still on the rise, reducing the overall buying power of U.S. consumers.

ABC reports that the Fed is looking to slow inflation enough to make smaller pay increases result in larger, inflation-adjusted income gains