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A tightening labor market combined with Donald Trump’s expected infrastructure stimulus package looks like a recipe for higher inflation and subsequent Fed rate hikes, all of which could stifle workers' wages.
While GDP grew at a 3.2% annual rate in Q3, gross domestic income, often a more accurate reflection of the economy, grew by 5.2%, due in large part to strong corporate profits as less money has been going to workers. Though there's been talk of rising workers' wages due to the tight labor market, households haven't enjoyed steady income gains since the 1990s, the Wall Street Journal reports.
If working families don’t get a serious raise it’s more than likely inflation will stay below the Fed’s 2% goal. If that happens and the Fed moves forward to aggressively raise rates, it will only hurt workers’ wages more. [WSJ]
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