Thursday, June 14, 2018

Wage growth showing signs of a downward shock

The latest wage growth data from the Atlanta Fed came out a few days ago, and like the JOLTS data is showing possible signs of a recession (or at least the undoing of the prior upward shock that might have been associated with a post-Lilly Ledbetter decline in the gender pay gap). Here's the latest data on the original forecast:


Also, I looked into the Employment Cost Index (ECI) which is another measure of wages and compensation. First the original model of the log derivative:


And since I was comparing with this picture from Ernie Tedeschi:


... I reconstructed the year-over-year model adding the extra data from the previous graph by digitizing it (for some reason, it wasn't on FRED):


Because this data is noisier and less frequently updated (only quarterly, roughly a month after the quarter ends), we can't really see any sign of a recession yet even if there was one.

...

PS Note that I use the Atlanta Fed's raw data, not the 3-month moving average they display on the website linked above.

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