According to the data released by the Labor Department last Friday, 263,000 jobs were added during November, which is higher than expected. More importantly, for the three months through November, average hourly earnings rose at a 5.8% annualized rate, up from an initially reported 3.9% annualized rate for the three months ended October.
This aggravates the Fed’s concern about wage and price increases creating a vicious feedback loop, which economists call a wage-price spiral. Hence, despite Fed Chair Jerome Powell signaling slower interest rate hikes from this month onward, there are concerns that policy rates could end up above 5% in 2023.
