October job figures released last week shows employment bouncing back after being battered by hurricanes this summer.
But the years-long trend of slow wage growth continues.
The Bureau of Labor Statistics figures show the economy added 261,000 jobs in October. The unemployment rate has fallen to 4.1 percent.
But hourly wages barely kept up with inflation, rising 2.4 percent during the month. The New York Times reports:
The hurricane-battered job market surged back to life in October, the government reported on Friday, the latest sign that the American economy has entered perhaps its strongest stretch of growth in years.
Yet the latest round of jobs data did nothing to resolve the question that has bedeviled the economic recovery for years: When will job growth translate into strong wage gains for American workers? Average hourly earnings were 2.4 percent higher in October than a year earlier, barely keeping pace with inflation.
Considering the tight labor market, with unemployment at its lowest level since Bill Clinton was president, many economists say the dividends have been paltry.
“It’s certainly trending the right way, but it’s surely still unexciting — even unacceptable — wage growth at this point,” said Dan North, chief economist at Euler Hermes North America.
Despite the slow wage growth, some economist say the long-term employment trends are encouraging:
“The trend is rock-solid,” said Ryan Sweet, director of real-time economics at Moody’s Analytics. “The labor market just continues to chug along, and it’s showing very little evidence of slowing.”
Indeed, there are signs that the economy as a whole is gaining strength. Last week, the government reported that gross domestic product rose at a 3 percent annual rate in the third quarter, the second-straight quarter of solid growth. Consumer spending, the dominant driver of economic growth in recent years, has stayed strong: Retail sales posted a big gain in September, and consumer confidence hit a nearly 17-year high this week.
But consumers are no longer alone in driving the economy forward. Stronger global growth (along with a weaker dollar) has led to higher demand for American goods and services in recent months, aiding the manufacturing sector and increasing exports.
“It’s finally feeling like the economy is starting to fire on multiple cylinders rather than relying solely on consumers,” said Brett Ryan, an economist at Deutsche Bank in New York.
The latest numbers came as President Donald Trump replaced Fed Chair Janet Yellen with Jay Powell.
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