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Free AccessMNI TRANSCRIPT: Powell on Wage Gains
WASHINGTON (MNI) - The following is the portion of a transcript from
Federal Reserve Chairman Jerome Powell's press conference after the FOMC meeting
Wednesday:
Q: Why aren't we seeing stronger wage gains? Wages are growing more slowly
now than they were toward the beginning of the year. Why is that?
A: Well, wage gains have moved up a bit, if you look back three, four
years, you will see wages are growing around 2 percent, now you see them moving
up more 3, 3 and a half percent. Why aren't they growing higher, at a faster
rate? It's a couple of things. I think there are a range of explanations. One
would be that productivity has just been low. Wages should go up to cover
inflation and productivity. Productivity has been low, and that is very likely
holding back wages...Productivity has been low, and that is very likely holding
back wages...So you do see, wages are going up the most for people at the lower
end of the, that has been true for the last couple years, lower end of the wage
spectrum. You do see wages moving up, they are not moving up at very high rates,
and at the end of the day, that probably has most to do with productivity.
Q: As far as the market not being as tidy as you thought, you are saying
there is more people on the sidelines that could join the labor force?
A: Yes, I would also say that we, if you ask people and we did ask people
what do you think the natural rate of unemployment is, people were writing down
numbers in the 5s and then writing down numbers in the 4s. Now unemployment has
been in the 3s for a year and a half. We still see wage inflation, as you
mentioned, the level of wage inflation has actually moved down, although there
may be compositional effects in that number. That may be, to some extent, about
younger workers coming in at lower wages than retiring workers but that
shouldn't have much of an effect actually. Why is it, it may be that there is
more slack in the economy, and I think we are seeing that, we are seeing really,
it showed up through higher participation. For many years we thought that there
is a trend decline in participation, notwithstanding that against that trend we
have seen prime age participation moving up steadily over the last two or three
years. It's a very positive thing. But it does provide more labor supply,
meaning a less tight labor market.
--MNI Washington Bureau; +1 202 371 2121; email: brooke.migdon@marketnews.com
[TOPICS: MMUFE$,M$U$$$]
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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.