Inside the White House with D.C.'s most wired reporter. Sign up for Mike Allen's Axios AM.

Stories

Fed chair Powell says inclusive wage calculations are better

Federal Reserve Board Chairman Jerome Powell arrives for a news conference on September 26, 2018. Photo: Mark Wilson/Getty Images

Federal Reserve Chairman Jerome Powell said at a news conference on Wednesday that "broader" measurements of income are better, but declined to comment on the White House's alternate proposal to calculate wage growth.

Flashback: Powell called tepid wage growth puzzling in recent months. The Council of Economic proposed its own methodology — accounting for non-cash benefits (bonuses, paid time off and health benefits) and a different measurement of inflation — which showed strong wage growth. That was before paychecks grew in August at a rate we haven't seen in almost a decade.

The Fed monitors a range of wage indicators. Speaking to reporters after the Fed announced it would raise rates for the third time this year, Powell cited accelerating pay as an example of a "particularly bright moment" for the economy. But some analysts argue that higher rates could erase any wage gains consumers have seen.

  • "Wage growth — finally it has accelerated a bit, but it's still a shadow of its former self. Especially after adjusting for inflation, which has picked up," Diane Swonk, chief economist at Grant Thornton, told NPR.

What to watch: The September jobs report next week, when we'll get another read of paycheck growth (and possibly, a revision of last month's number.)