Waning wage growth and market reaction
- Employee costs in the U.S. rose at the slowest pace in 2 1/2 years
- Rapid wage growth after the pandemic is waning
- Compensation increased at a 4.2% pace in the 12 months ended in December
- The Dow Jones Industrial Average and S&P 500 were set to decline in Wednesday trading
The cost companies pay to employ workers in the U.S. rose by 0.9% in the fourth quarter, marking the smallest increase in two and a half years. This indicates that rapid wage growth experienced after the pandemic is now slowing down. The rise in the employment cost index was the smallest since the spring of 2021. Compensation had been increasing by at least 1% for 10 consecutive quarters, a trend not seen since the late 1980s. However, higher wages can contribute to inflation if they outpace the economy’s natural rate of growth. The government reported that compensation increased at a 4.2% pace in the 12 months ended in December, which is the smallest increase in two years but still above the 3.5% rate preferred by the Federal Reserve. As a result of this news, the Dow Jones Industrial Average and S&P 500 were expected to decline in Wednesday’s trading.
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Factuality Level: 7
Justification: The article provides information about the rise in employment costs and compensation, citing government data. However, it lacks specific details and context, such as the reasons behind the slowdown in wage growth and the implications for the economy. The article also includes unnecessary background information and a brief mention of market reaction without further analysis. Overall, the article is somewhat factual but lacks depth and comprehensive reporting.
Noise Level: 3
Justification: The article provides some relevant information about the rise in employment costs and its potential impact on inflation. However, it lacks depth and analysis, and there is a lot of filler content such as the mention of text-to-speech technology and the request for feedback. The article also does not provide any actionable insights or solutions.
Financial Relevance: Yes
Financial Markets Impacted: The article provides information on the cost companies pay to employ workers, which can have implications for labor markets and potentially impact the stock market.
Presence of Extreme Event: No
Nature of Extreme Event: No
Impact Rating of the Extreme Event: No
Justification: The article discusses the cost companies pay to employ workers, which is a financial topic. However, there is no mention of an extreme event or its impact.
www.marketwatch.com 
