Salient to Investors:

Jan Hatzius at Goldman Sachs said:

  • There is little evidence of the “pent-up wage deflation” that Yellen cites as a possible reason behind the slow increase in earnings and says the opposite was true, with the areas having below-average wage growth during the recession now showing above-average acceleration. “Pent-up wage deflation” holds that wages did not fall enough during the past recession because employers refrained from cutting pay in order to maintain employee morale.
  • The continued weakness of wages signals continued labor market slack
  • The employment cost index is a less noisy measure than other gauges such as the average hourly earnings data.
  • Goldman economists expects the Fed to start raising rates in Q3, 2015, agreeing with a Bloomberg median economist forecast.


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