at Calculated Risk on 12/27/2024 08:11:00 AM
Earlier I posted some questions on my blog for next year: Ten Economic Questions for 2025. Some of these questions concern real estate (inventory, house prices, housing starts, new home sales), and I posted thoughts on those in the newsletter (others like GDP and employment will be on this blog).
I’m adding some thoughts and predictions for each question.
Here is a review of the Ten Economic Questions for 2024.
7) Wage Growth: Wage growth was solid in 2024, up 4.0% year-over-year as of November. How much will wages increase in 2025?
The most followed wage indicator is the “Average Hourly Earnings” from the Current Employment Statistics (CES) (aka “Establishment”) monthly employment report.
Click on graph for larger image.
The graph shows the nominal year-over-year change in “Average Hourly Earnings” for all private employees. There was a huge increase at the beginning of the pandemic as lower paid employees were let go, and then the pandemic related spike reversed a year later.
Real wage growth has trended down after peaking at 5.9% YoY in March 2022 and was at 4.0% YoY in November 2024. Although wage growth was above expectations in November, the trend is clearly down.