Drilling Down Into The US Inflation Story

More on Wage Growth:

http://www.bloomberg.com/news/articles/2015-02-20/the-kids-are-alright-as-u-s-job-wage-gains-reach-millennials

• On the heels of my comments on expectations for future inflation from my Feb 19 blog, comes a Bloomberg story on wage growth.
• Specifically focusing on the "Millennials": the age group from 16 to 34 (at the moment).

• they are projected to overtake "Baby Boomers" as the biggest generation in the US in 2015.
• This is expected to have a considerable impact on the US economy.
• Especially because their incomes are growing again after suffering considerably through the Great Recession.
• While total wage growth at approx. 2.2% remains below what the Fed would like to see (which is somewhere between 3-4%), the improvement in the Millennial's situation may start to impact the bigger picture in a positive way.
• Wage inflation is one of components that has allowed the Fed to be patient on its next step of interest rate increases.
• However, if signs of wage inflation begin to appear, the Fed may not be so patient anymore.
• So we shall be keeping a wary eye on the outlook for wages in the US (and eventually Canada) for clues to FOMC and BOC monetary policy and future interest rate activity.

The views expressed are those of the author, Scott Tomenson, a Raymond James Financial Advisor, and not necessarily those of Raymond James Ltd. It is provided as a general source of information only and should not be considered to be personal investment advice or a solicitation to buy or sell securities. Investors considering any investment should consult with their Investment Advisor to ensure that it is suitable for the investor's circumstances and risk tolerance before making any investment decision. The information contained in this blog was obtained from sources believed to be reliable, however, we cannot represent that it is accurate or complete. Raymond James Ltd. is a member of the Canadian Investor Protection Fund.