Moderate Inflation Ahead, Tight Job Market Boosts Wages
$DIA, $SPY, $QQQ, $VXX
A tight US labor market was helping lift wages across most of the nation through late February and contributing to “moderate inflation” in most areas, a new Fed survey showed.
The central bank’s Beige Book economic report, based on anecdotal information collected by the 12 regional Fed banks through 26 February, showed that the nation’s “modest to moderate” expansion was spreading the benefits of higher pay more widely. The survey also contained evidence that a pickup in inflation was more broadly based.
“Across the country, contacts observed persistent labor market tightness and brisk demand for qualified workers, as well as increased activity at staffing placement services,” according to the report, released Wednesday. “Most districts saw employers raise wages and expand benefit packages in response to tight labor market conditions.”
Prices increased in all districts, the survey stated, “and most reports noted moderate inflation.” The previous Beige Book report, released 17 January, noted that “most districts reported modest to moderate price growth.”
The report may add to expectations among investors that the central bank could end up raising interest rates in 2018 by more than the three quarter percentage-point moves that officials projected in December.
The rate-setting Federal Open Market Committee is scheduled to meet March 20-21, and investors widely expect the sixth increase since December 2015.
One of the Fed’s more dovish policy makers, Atlanta Fed President Raphael Bostic, said earlier Wednesday he had upgraded his own projection to three hikes this year, from two. Fed Governor Lael Brainard, another official who has argued a cautious approach to raising rates, said late Tuesday the economic outlook is improving and signaled support for continued gradual rate increases.
Wednesday, the major US stock market indexes finished at: DJIA -82.76 at 24801.36, NAS Comp +24.64 at 7396.64, S&P 500 -1.32 at 2726.80
Volume: Trade on the NYSE came in at: 840-M/shares exchanged
- NAS Comp +6.8% YTD
- S&P 500 +2.0% YTD
- DJIA +0.7% YTD
- Russell 2000: +1.7% YTD
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