Weekly wages are rising, American consumers are spending their money and prices are following suit in signs that a continued economic recovery sets the stage for a Federal Reserve rate rise in December and the cycle beyond that, despite concerns over low levels of inflation.
The U.S. core consumer price index, which strips out food and energy prices for a clearer look at underlying inflation, moved higher in October, rising after a sharp drop earlier in the year that had unnerved some U.S. policymakers.
The Fed’s preferred personal consumption expenditures price index has also reversed course, rising to 1.6 percent in September from 1.4 percent in August, and analysts argue it will feed off steady wage and job growth.
Further evidence: retail sales rose a better-than-expected 0.2 percent in October and analysts estimate they may hit 3 percent annual growth for the full year.
Though the rise in inflation nicked a penny off of the average hourly earnings for production and nonsupervisory workers in October, a jump in the length of the work week made their paychecks fatter anyway.
Average weekly earnings rose 2.6 percent for the same group of workers on an annual basis, the strongest increase since June, continuing a trend of rising wage gains under way since 2011.
Taken together the data caused some forecasters to bump up their estimates of economic growth for the year, and firm their expectations for the Fed’s December action.
Reference: Reuters
Read more: http://www.reuters.com/article/us-usa-fed-inflation/rising-retail-sales-weekly-wages-and-inflation-point-to-positive-cycle-for-fed-idUSKBN1DF2UP
Thai
Eng