White House’s new wage measure

The Fed is closely watching upward wage pressure in core services, excluding the housing market. Apparently, so is the White House.

• Today, President Biden's economic advisers released data that shows a notable slowdown in wage gains across those sectors.

Why it matters: It's rare to see the White House tout slowing wage growth, but developments there could set the path for how inflation evolves.

Driving the news: In a blog post, the White House Council of Economic Advisors outline a time series they constructed, which they argue better measures wage growth in industries within the core non-housing services (or NHS, as they deem it).

• Their data shows average hourly earnings rose at a peak 8% annual rate for production, non-supervisory workers in those industries early last year. For all private-sector workers in these industries, it was 7%.
• But as of December, both of these measures of average hourly earnings growth had slowed down — rising at a roughly 5% annual rate.

Zoom out: As long as the labor market remains tight, Powell has said, these industries — which span barber shops to education and restaurants — are the ones most likely to pass higher costs to consumers. That could cause inflation to spiral upward.

The bottom line: The current rate is likely still too hot for the Fed's liking. But, at least by this measure, it suggests wage pressures are cooling.