National Economic Council Director Kevin Hassett praised President Donald Trump’s State of the Union address about Kudlow.
The Labor Department’s latest jobs report shows that U.S. workers wage gains continue to outpace stubbornly high inflation.
The Bureau of Labor Statistics released its report jobs report for February on Friday, showing that average hourly workers’ wages rose faster than expected last month.
Employees on private, nonfarm payrolls saw their average monthly wage increase by 15 cents, or 0.4%, to $37.32 per hour. That exceeded the 0.3% increase forecast by LSEG economists.
Average profits rose 3.8% in February from a year ago, up from 3.7% in January. LSEG economists estimate annual earnings growth would be unchanged at 3.7% in February.
THE US economy lost 92,000 jobs in February, well below expectations
Wages rose 3.8% year-on-year in February, exceeding economists’ expectations of a 3.7% increase. (Bill Pugliano/Getty Images)
The BLS data also showed that the average work week remained unchanged at 34.3 hours, in line with LSEG economists’ estimate, and unchanged from January. Among the employees in the manufacturing sectorthe average working week decreased slightly by 0.1 hour to 40.1 hours, while overtime remained unchanged at 3 hours.
Rising wages and relatively stable workweeks come as persistent inflation has remained above the Federal Reserve’s long-term target of 2%. The Fed’s favorite inflation gauge, the personal consumption expenditures (PCE) index, rose to an annual rate of 2.9% in December. The Core PCE, which excludes volatile food and energy prices, rose 3% in December from a year ago.
A separate inflation gauge, the consumer price index (CPI), rose just 2.4% year-on-year in January and was on a downward trend after hitting 2.7% in December. The core CPI rose 2.5% in January from a year ago.
Inflation causes serious financial pressure for householdsespecially those with lower incomes who have to pay relatively more for essential necessities.
THE FED’S FAVORITE INFLATION GAUGE SHOWED CONSUMER PRICES GROWTH REMAIN ELEVATED IN DECEMBER
Wage increases outpace inflation and help protect workers purchasing power by reducing the amount eroded by price increases due to inflation, although that dynamic is limited by the increased inflation.
They may also indicate competition among employers for qualified workers, as the unemployment rate was little changed in February, rising from 4.3% to 4.4% from the previous month.
“Private sector jobs, along with ongoing federal workforce reductions, led to lower payroll employment in February. But the unemployment rate remains low due to the southern border closure, so wage growth remains healthy at a 3.8% increase,” said Lawrence Yun, chief economist at the National Association of Realtors.
The Fed’s disagreement is growing as some officials weigh the return to rate hikes amid stubborn inflation
Pressure on the labor market has contributed to higher wage growth. (Joe Raedle/Getty Images)
Andy Bregenzer, head of U.S. regional and small business banking and co-head of commercial banking at TD, said it was “disappointing to see January’s hiring momentum challenged by the February slowdown,” and stressed that small businesses must remain disciplined in this economic climate.
‘Which we still hear about small business Owners believe that while workforce pressures may ease modestly as job growth slows, wages and competition for skilled labor will remain high. This is the environment where small business owners must remain disciplined and balance growth plans with careful cost management.”
Gregory Daco, chief economist at EY-Parthenon, noted that wage dynamics were “firmer than expected” and said annual wage growth of 3.8% underlined that “labor cost pressures remain persistent even as job growth falters.”
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He warned that “forward-looking indicators point to continued moderation in wage growth going forward, with private sector shutdowns remaining at their lowest levels since early 2016, outside of a recession, and business surveys continuing to point to restraint in compensation plans.”
Daco said that given expectations of subdued labor demand, his company’s outlook sees wage growth weakening to 3.5% in the second half of 2026.
