US Wage Growth Shouldn't Spur Inflation, OECD Says

Real wages successful nan U.S. should beryllium capable to emergence to pre-pandemic levels without importantly affecting inflation, nan Organisation for Economic Co-operation and Development (OECD) said Tuesday.

"As existent wages are recovering immoderate of nan mislaid ground, profits are opening to buffer immoderate of nan summation successful labour costs," nan OECD wrote successful a study connected nan U.S. occupation market. "In galore countries, location is room for profits to sorb further costs increases."

While wages person risen faster than prices complete nan past fewer years successful nan U.S., inflation-adjusted existent wages are still astir 0.8% beneath their 2019 levels, nan OECD said. The pandemic caused a driblet successful existent wages, pinch COVID-related shutdown measures causing issues on nan proviso concatenation for a assortment of products, driving prices higher.

The OECD said that wages person made up overmuch of those losses, but still person room to emergence further without affecting profit margins capable that prices jump again.

There are nary signs of a "price‑wage spiral," nan group said.

The U.S. unemployment complaint was at 4.1% successful June, compared to nan 4.9% nan OECD reported successful May for its 38 personnel nations. The OECD expects nan U.S. complaint to stay astir 4% done 2025, nan study said.