Headline Roundup • April 28th, 2023
Data Shows Rising Wages, Slowing Inflation, and Flat Spending Ahead of Fed Interest Rate Meeting
Economy And Jobs,Federal Reserve,Interest Rates,Inflation,Recession,Wages,Labor,Business,Trade,Banking And Finance
Summary from the AllSides News Team
Economic data released Friday showed rising wages, slowing inflation, and steady consumer spending. What does this mean for the Federal Reserve’s fight against inflation?
Wages: Seasonally-adjusted civilian worker pay rose 1.2% in the first quarter of 2023 — up from 1.1% growth in the previous quarter — and 4.8% over the last four quarters.
Inflation: The Personal Consumption Expenditures (PCE) price index rose 4.2% in the 12 months ending in March and 0.1% in March alone, down from February’s 5.1% annual and 0.3% monthly rates. Core PCE, which excludes volatile food and energy, rose 0.3% in March.
Consumer Spending: Consumer spending was unchanged in March, following a 0.1% increase in February.
For Context: The Fed will meet next week to decide how to proceed on its anti-inflation interest rate hikes, which raise borrowing costs and cool economic activity. There have been real costs, including contributing to the liquidity crisis that brought down Silicon Valley Bank. However, the Fed has also previously cited a strong labor market as a sign the economy can withstand higher interest rates to stabilize inflation at the Fed’s 2% annual target.
How the Media Covered It: Coverage appeared less common in right-rated outlets. Some analyses differed in framing; while USA TODAY (Lean Left bias) said slowing inflation meant interest rate hikes could slow down, Bloomberg (Lean Left bias) said persistent inflation reinforced the case for continued rate hikes.
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Wage growth stayed elevated to start the year and inflation remained high, likely keeping Federal Reserve policy makers on track to raise rates again next week.
Employers spent 1.2% more on wages and benefits in the first quarter from the prior three months, a slight uptick from an upwardly revised 1.1% increase in the fourth quarter, the Labor Department said Friday. The employment-cost index advanced 4.8% last quarter from a year earlier, an easing from the 5.1% gain at the end of last year.
U.S. consumer spending was unchanged in March, while underlying inflation pressures remained strong, which could see the Federal Reserve raising interest rates again next month.
The unchanged reading in consumer spending last month, reported by the Commerce Department on Friday, followed a downwardly revised 0.1% gain in February. Consumer spending, which accounts for more than two-thirds of U.S. economic activity, was previously reported to have increased 0.2% in February. Economists polled by Reuters had forecast consumer spending dipping 0.1%.
The data was included in the advance gross domestic product report...
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An inflation measure that’s watched closely by the Federal Reserve eased further last month in a development that could keep the central bank on track to pause its aggressive interest rate hikes.
Yet an underlying measure of price increases dipped but remained stubbornly high.
Consumer prices increased 4.2% in March from a year earlier, slower than the 5.1% pace in February and the 40-year high of 7% in June thanks to lower food and energy prices, the Commerce Department said Friday. That’s the smallest annual gain since May 2021.
On a monthly...
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