Wall Street Journal (06/13/14) Kathleen Madigan
Economists are increasingly expecting wage growth to pick up in coming months, a development that could spur accelerated growth in the broader economy. According to The Wall Street Journal’s monthly survey of 48 economists, job growth is projected to average 207,000 per month this year, the best pace since 2005. The consensus view projects the jobless rate to end the year at 6.1%. “Business surveys and employment data are looking quite strong, even though GDP has been disappointing,” says Jim O’Sullivan of High Frequency Economics.
The economists cite stronger consumer spending as the biggest potential boost to growth this year. Key to increased spending would be an increase in stagnant wage growth. The recent acceleration of hiring opens the way for wage growth to increase. However, some economists say that wage trends may be distorted by the Affordable Care Act, said Sean Snaith at the University of Central Florida. Businesses that are paying more for their employees’ health care benefits may try to skimp on pay raises.