Employer costs are soaring. The Employment Cost index (ECI) unexpectedly rose 1.2 percent in 2024 Q1, rattling the stock and bond markets.
The BLS Employment Cost Index was on the hot side for the first quarter of 2024.
- Compensation costs for civilian workers increased 1.2 percent, seasonally adjusted, for the 3-month period ending in March 2024
- Wages and salaries increased 1.1 percent and benefit costs increased 1.1 percent from December 2023.
Wages and Benefits Percent Change from Year Ago
Year-Over-Year and Monthly Annualized Details
- Compensation costs for civilian workers increased 4.2 percent for the 12-month period ending in March 2024 and increased 4.8 percent (annualized) in March.
- Wages and salaries increased 4.4 percent for the 12-month period ending in March 2024.
- Benefit costs increased 3.7 percent over the year.
- Compensation costs for private industry workers increased 4.1 percent over the year. In March 2023, the increase was 4.8 percent annualized.
- Wages and salaries increased 4.3 percent for the 12-month period ending in March 2024.
- The cost of benefits increased 3.6 percent for the 12-month period ending in March 2024.
Major Employment Cost Index Categories
Total compensation for civilian workers jumped 1.2 percent vs Bloomberg Econoday expectations of 0.9 percent. Annualized, the monthly change was 4.8 percent.
Economists took the rise last quarter and estimated the same again.
Special merit goes to state and local government employees who are doing much better than the averages (red highlights) in the above chart.
This does not bode well for those expecting rate cuts by the Fed. Yield on the 10-year note is up 7 basis points to 4.69 percent. And the 30-year mortgage rate jumped 8 basis points to 7.51 percent.
Truflation Silliness
On April 20, I noted Truflation Claims Inflation is 2.06 Percent
Would you believe believe year-over year inflation is barely over two percent? That’s the Truflation claim as of April 17, 2024.
Some otherwise bright people on Twitter whom I follow actually believe that Trufltion nonsense. Click on the above link for details.
On April 19, I noted Auto and Home, Insurance & Maintenance Costs Soaring and People Are Angry
Some homeowners are skipping home insurance. What’s going on and who is to blame?
Costs are rising and so are wages.
Chipotle CEO on Menu Prices
Food away from home has risen at least 0.3 percent for 34 out of the last 36 months.
On April 28, I noted Chipotle CEO on Menu Prices “California Isn’t Making It Easy”
Sticker Shock in California
Higher state minimum wage went into effect April 1; chains say burritos and burgers are getting more expensive in response.
Expect another big jump in employer costs next quarter too.
@Mish – don’t forget the DOL rule passed last week to adjust upward the overtime exemption threshold. For those in exempt roles/industries, the figures adjusts from $35,500 to $43,888 on July 1st, and then to $58,646 on January 1, 2025.
In my company this will add an additional $43k to our payroll over the course of this year, before I even add another body.
In addition, and largely as a result of this, we won’t be hiring entry level engineers moving forward – we’re shifting those tasks to the Philippines and South Africa because we cannot raise rates fast/high enough for these entry level tasks.
The law of unintended consequences is that the three entry level hires I made last year (literally, giving several 20-somethings a chance at a new career/fresh start), won’t be repeated in the future because we’re no longer incentivized to do that.
“Truflation” = “Media Matters”
pure propaganda poorly disguised as authority.
Will have to see what Powell says but Biden’s energy policy has basically pigeonholed Powell.
ADP release shows a disparate job creation form.
This is a regional view.
Northeast 36,000
Midwest 33,000
South 124,000
West 11,000
Whatever one may think about ADP as a precursor for NFP, what is revealing is how weak West of US has become when it comes to job creation. This region was always a powerhouse and now it is weakest in Nation.
High prices are cutting into consumption and as consequence job creation is faltering in Western US. Even though wage inflation is accompanying general inflation rates and now has become entrenched it is not gunning product demand. People have run out of spending power.
This is also appearing in Consumer confidence numbers which remain weak.
South is strongest as people who live there still believe in building for a future and then act on those beliefs.
Whilist Western US has adopted a lifestyle based upon cheap thrills and now is retrenching.
Recession is inevitable for Western US and reveals just how fragile things are when looked at US economy on a regional basis. I suspect Northeast will be next to crack or as Manufacturing weakness persists Midwest which Chicago is per-eminent can stumble just as easily.
As everything these days is political in context WH will be in full panic mode as West Coast put Biden into office and now suffers from severe buyer regret.
Carville meltdown was revealing as to this subject.
I expect Powell to hold rates at the May meeting and increase rates this summer. I’m hoping the fed significantly increases rates so we can ladder CD’s to offset some inflation.
Some would just like to buy a house or a decent car. I guess that doesn’t matter as long as you get a decent return on your CD’s.
You get out of life what you put into it. I worked 2 jobs for a long time to save enough money for a downpayment on a condo. My interested rate on the loan for the condo was 10.25%. Current mortgage interest rates are no where close to that.
You mean the $7,000,000,000,000 in helicopter money dropped the past 4 years wasn’t equally distributed on all roofs?
Between the FED and FED Govt it was more like $13T
We just priced a Package of Chicken Breasts, 8 ea, one pound here in Oregon and it was $12.99. Two years ago: 99 cents a pound on Sale and $1.99 normally priced.
We bought two Bags of Groceries today, no alcohol and it came to $125. NORMAL STUFF. How families of four can afford this is UNREAL crazy.
Cans of Tomato Sauce are now $1.99.
We just met a young Woman, at the store, and she used to work in a Fresh Fish Shop (We live in a Port City, 2 mins from the local Private Marina and the Commercial Marine is within 1/2 a mile by sidewalk: 20 mins.
She said that she was quitting her Grocery Job due to the Child Care costing her MORE than she makes to look after her Two Kids. She is a single Mom.
So, she is gonna be a stay at home, resume college and work for an Insurance Co. as a Call reception/Client services person to save money on the Kid’s care.
Wanna know why this is happening?
HIGH PRICED OIL DESTROYS GROWTH
According to the OECD Economics Department and the International Monetary Fund Research Department, a sustained $10 per barrel increase in oil prices from $25 to $35 would result in the OECD as a whole losing 0.4% of GDP in the first and second years of higher prices. link to iea.org
HOW HIGH OIL PRICES WILL PERMANENTLY CAP ECONOMIC GROWTH
For most of the last century, cheap oil powered global economic growth. But in the last decade, the price of oil production has quadrupled, and that shift will permanently shackle the growth potential of the world’s economies. link to bloomberg.com
The central banks have been using epic stimulus to offset this for two decades… but now the battle is being lost. Brace for impact
I know I am stupid, as a consequence I can probably not make head nor tail of your ‘contribution’….can t open your links either , but oil prices from 25$ to 35$/barrel ?! Oil prices are now 80$/barrel ! which is rather cheap in a historical context….so wha’ exactly you on about ?
Surely you can do the math … if every $10 increase chops 0.4% off GDP …then work out what $90 oil does to growth.
Alas the central banks have been offsetting this high prices with gargantuan stimulus since just after the turn of the century — if not then we’d not be having this discussion
However what cannot continue – will stop.
We are very close to stopping
Hope that helps you understand this situation
I do get it now, thanks ! …You will agree it was a bit confusing at first …
STEM degrees are reaping the rewards of a good education. Sociology and poetry not so much.
With minors in your choice of victimology or paid protestor
“Subprime is contained.” “The vaccine is safe and effective.” “Inflation is transitory.” Bidenomics is working.”
The MONSTER house bubble by metro area. Unbelievable.
link to wolfstreet.com
Check out Tesla Fan Boy’s take on the Hertz EV disaster hahaha…
link to wolfstreet.com
I wonder if Jeff Green and Wolf Richter are one and the same…. they certainly both inhabit a similar delusion world powered by coal charged EVs hahaha.
Hall of Fame idiotic quote:
Wolf Richter
Apr 30, 2024 at 1:19 am
I love price cuts. Americans need price cuts, the legacy automakers have ripped Americans off for years. We need a price war in the US that lasts years.
Apparently Wolf believes deflation is a good thing… I wonder what he thinks of stagflation
Remember when Alan Greenspan, Berspankme and Old Yeller were all worried that inflation was running below 2%? Good times. They finally won!
Per the CPI-W 1984 index, inflation has been 23.7% total over the past 5 years.
The ECI (all workers) YoY percent changes “in constant dollars” from 2019 to present were: 2.8, 2.6, 4.5, 4.8, 4.2 for a total of 18.9 percent.
Total compensation costs have not outpaced inflation over the last 5 years.
Stop blaming the workers for the inflation.
“Come on man!”
No one is blaming the workers, but if the government artificially sets the minimum wage at $20 when that activity may only be worth $14 in a free market, that’s inflationary. Covid showed us that employers will pay well above minimum wage if the market conditions mandate it.
“..if the government artificially sets the minimum wage at $20 when that activity may only be worth $14 in a free market, that’s inflationary.”
And ditto when government sets interest rate at 0 when it would be 10%,at least,in any even remotely free market.
Difference being: The latter has something on the order of several thousand times as much (destructive) impact as the former.
The difference is so insanely one-sided, that the only thing accomplished by even bothering one iota about the former, as long as the latter is not rectified, amounts to nothing more than being played and suckered like a useful idiot.
These days, ALL meaningful government wealth transfers are accomplished via monetary and so called “asset” channels. Those on the “beneficiary” end of those, are the ones collecting net welfare.The rest, are net paying for it. No exceptions. At all.
No surprises here, every month 160k or so boomers walk out the labor door forever to live the good life on the dole. Probably another 150k or so retire wealthy off to live the good life on all that capital asset money. That leaves everyone else to pick up the slack so expect more of the same and few “mass layoffs” until the whole thing falls apart.
“It’s turtles all the way down and inflation all the way up!”
Every month 180,000 Baby Boomers perish, March 2024 was a month that saw Social Security rolls decline by some 14,000 beneficiaries. The numbers tide has turned and social security numbers will continue to drop because of decreasing life expectancy.
Good point, but I think a bunch of the decrease in life expectancy is probably due to younger people being killed by fentanyl; I believe we are now over 100,000 fetanyl deaths per year in the US. Is there good data on which demographics are contributing to the decreasing life expectancy?
Mortality statistics are spotty at best. Spotty statistics allow for controlling the narrative.
Google CEO comments from multiple insurance companies that are stating they are and have been seeing a 40% increase in excess deaths.
This is the impact of the Covid ‘vaccines’… a major cull
Sadly True
I don’t know where you get your information by it’s wrong 99% of the time. My source of data is here.
link to ssa.gov
I suggest you download and do the math.
Like all economists, I just do the new math.
link to newsweek.com
Come on, you nincompoop: you know NOTHING about Boomer retirement other than what you read on TIKTOK.
ALL of my Boomer Friends are retired and ALL of us are not on Soc Sec. I have a SEP-IRA from being self-employed and I worked 60 hour weeks running my various businesses and have NO pension bene’s.
NOT ONE OF US will TAKE SOC SEC. I do not need that piddling piece of bullshit that my deductions and Self-Employment Taxes paid into. Instead, I am waiving the Money into a Charitable Trust that is put aside for the low I.Q.
You can sign up here: http://www.iamadumfuk.com
My situation is I SAVED. I would guess that with your level of Intelligence, that the word is not comprehensible.
I don’t know where you get your information by it’s wrong 99% of the time. My source of data is here.
link to ssa.gov
I suggest you download and do the math, get one of your grand kids to help because I know it will be beyond you to do.
Just set them all up at a drive-in watching Gunsmoke, Matlock and Murder …………….She Wrote.
The airlines are leading the way with a wage-price spiral, but the effects have not moved through the economy much. The effects are coming especially after the other employee groups (baggage handlers, flight attendants, and mechanics) get their 40% increase (over 4 years. The pilots obtained their increase in the last 2 years. SW announced a quarterly loss, while American is not making any money except on regional routes with lower pilot compensation. Biden has given lots of aid to union groups to obtain much higher compensation. Then, Democrat cities/states have imposed much higher minimum wages with inflation adjustment. Denver now has a minimum wage of $18+ with inflation adjustment. The USA economy has never faced this type wage/price spiral, largely a government induced wage/price spiral. I anticipate major layoffs in the private sector except for protected parts of the private sector in 2025.
In the most positive and encouraging manner possible……
FUCK Jeeerome Powell, the Hobbit Yellen and the entire amalgamation of FED fuckups ever assembled
They ALL belong behind bars in orange jumpsuits
P.S.
I’ll keep saying it over and over that the FFR should be 8% and the long bond around 10%
Yes however the Fed had to do something to offset the rising costs of energy…
HIGH PRICED OIL DESTROYS GROWTH
According to the OECD Economics Department and the International Monetary Fund Research Department, a sustained $10 per barrel increase in oil prices from $25 to $35 would result in the OECD as a whole losing 0.4% of GDP in the first and second years of higher prices. link to iea.org
HOW HIGH OIL PRICES WILL PERMANENTLY CAP ECONOMIC GROWTH
For most of the last century, cheap oil powered global economic growth. But in the last decade, the price of oil production has quadrupled, and that shift will permanently shackle the growth potential of the world’s economies. link to bloomberg.com
SEE PAGE 59 – THE PERFECTSTORM : The economy is a surplus energy equation, not a monetary one, and growth in output (and in the global population) since the Industrial Revolution has resulted from the harnessing of ever-greater quantities of energy. Butt he critical relationship between energy production and the energy cost of extraction is now deteriorating so rapidly that the economy as we have known it for more than two centuries is beginning to unravel link to ftalphaville-cdn.ft.com
0 likes. This supports my theory the people say they want the truth – but really – they do not … unless there is a hollywood ending involved.
I worked at the Chicago Board of Trade in the late 80’s, early 90’s in the 30 Year Bond Pit. The interest rate on that long bond was 9 something percent! The world was not collapsing because of a 9 plus percent interest rate!
Indeed Jim 👊
Do you know The Chief on Stocks & Jocks podcast? His best dining recommendations are for old school supper clubs in far sw burbs.
Ya but the 9% was not applied to a mortgage that is now a much higher multiple vs income… so this is very different.
The world leverage up big time when rates were near zero and now the world is f789ed.
Cannot this wasn’t foreseen by the “so called” expert ECONomists.
A book on the subject of our domestic Enemies. The Lefty Loons.
link to horowitzfreedomcenterstore.org?
How does this fit with your narrative that the everyman is falling behind? All of the wage increases are going to the top 10%?
This fits in fine with my theory that inflation is rampant and it’s the decline in the rate of inflation that’s transitory.
Where did I say “everyman is falling behind”?
As far as I know you didn’t, I’m paraphrasing. There are some groups of people you say aren’t benefiting from what most economists consider a very good economy. Renters is the one group that comes to mind, I think there are others.
Whether inflation is going to be “rampant” given employment cost trends depends on labor productivity growth. At this point, the productivity growth figures are consistent with the Fed’s 2 percent inflation target. But long-term productivity growth may well be lower than the recent figures, and then the Fed has a real problem on its hands if employment cost keep trending at 5 percent or so.
Isn’t there a pareto rule that the top 20% do 80% of the work.
You are worried too much. The Treasury just approved a third-shift at the Wash DC printing office. No 3rd shift in Fort Worth though – it’s a little cheaper there to print those $20 bills. Can’t have that!
Those new homeowners that ‘dated the rate’ are finding out that they impregnated the rate, and it’s here to stay.