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Revisions to nonfarm payroll jobs, labor force and population numbers came out Friday, and it's a lot to wade through. Here's something a little more straightforward: Average hourly earnings -- which is to say, wages -- were up in January more than economists expected, rising 0.5% from December and 4.1% year over year.
Wages were climbing superfast in 2021 and 2022, peaking at nearly 6% per year, as employers scrambled for workers in the pandemic recovery. That's gradually calmed down. Now, wage growth is not too hot, not too cold.
So what could January's pumped-up wage numbers be signaling?
First thing to know is this could be a one-month blip, an effect of wildfires in California and bad winter weather across the country, said Bill Adams, chief economist at Comerica Bank.
"When a natural disaster hits, you often see wage growth pick up because salary workers are still getting paid on a snow day, hourly workers typically don't," he said.
Meanwhile, longer-term forces are pushing employers to keep giving workers hefty raises even though the labor market is cooling. There are fewer job openings and fewer workers quitting to get higher pay in a new job, said Andrew Flowers, chief economist at recruitment technology firm Appcast.
"Employers are hiring less, but they're also firing less. They don't want to lay off workers because they remember the scars of 2021 and 2022, when talent was so hard to find. And so they're giving in to some of these wage demands that, compared to pre-COVID times, look hot," he said.
Hot wage growth has spooked the Federal Reserve in the recent past, stirring fears that it could generate more inflation.
But it shouldn't this time around, said Flowers. "This level of wage growth can be sustained because workers are producing more per hour," he said.
Right now, we're enjoying a healthy balance of wage and price growth, said Comerica Bank's Bill Adams. "Wage growth outpacing inflation is a good type of economy to have," he said.
At last check, consumer prices were up 2.9% year over year. Wages, as mentioned above, were up 4.1%.
Consumers sort of get that, said Joanne Hsu at the University of Michigan, where she runs the consumer survey. "They actually are showing a slight uptick in their income expectations," she said.
Still, consumer sentiment has fallen sharply since the beginning of the year, driven in part by fears of tariffs pushing up prices.
As for rising wages, Hsu said, consumers "don't necessarily see this passing through to their personal finances because they are expecting any income gains they see to be eroded away."