This is actually one of the main reasons we are seeing a stock selloff. Wages bubbling up imply that inflation may be moving into the economy.
Basically with Trump taking over from Obama a lot of money that was on the sidelines is coming out of the woodwork. People didn’t feel comfortable investing in businesses in the Obama world. A world defined by a president who really believed “you didn’t build that.”
Now there is relief. The problem is all that Fed created money over the last decade is finally making its way into the system. If it comes in too fast the Fed will seek to correct its mistake and raise rates quickly, which will likely create more economic dislocation if not a recession.
This is why interest rates should be determined by the market and not the central planners at the Federal Reserve. Let rates adjust with demand instead of lurching according to the whims of a politburo.
The kind of pay raises for which American workers have waited years are now here for a broadening swath of the country, according to a Reuters analysis of state-by-state data that suggests falling unemployment has finally begun boosting wages.
Average pay rose by more than 3 percent in at least half of U.S. states last year, up sharply from previous years. The data also shows a jump in 2017 in the number of states where the jobless rate zeroed in on record lows, 10 years after the financial crisis knocked the economy into a historic recession…
…“Everyone in the building knows that they can leave and make more money,” said Michael Frazer, president of Frazer Computing, which provides software to U.S. used-car dealers from its offices in northern New York state. In response he raised wages by 6.1 percent at the end of 2017, up from 3.7 percent the previous year.