U.S. wage growth looks to be peaking, a heartening development for the Federal Reserve if not for American workers.
After handing out hefty salary increases over the past year, companies are now becoming more cautious with their cash over concern further big payouts will eat into profits, according to staffing companies, business owners and recent surveys. Economists are penciling in a moderation in annual earnings growth to 5.2% in May from April’s 5.5% in data out next week. Those figures are among the highest in records dating back to 2007.
Employers have had success passing on higher labor costs to customers so far, but may be reaching a tipping point at which higher price depress demand. That’s exactly what the Fed is hoping for in its all-out mission to tame some of the worst inflation in 40 years.
