US Macro Updates

The One Stop Portal for US Macroeconomic Data. Simplified and Summarized! 

We simplify and summarize key data so that you don’t have to spend hours reading confusing and long media releases. Read key economic releases and major events here in under 2 minutes. And we will explain the key takeaway for you. Stay informed and form a robust view on macroeconomic matters to aid your successful investment decisions

30th Apr 2024

Employment Cost Index

Key takeaway: The latest Employment Cost Index data for Q1 2024 showed compensation costs of civilian workers increased 1.2% seasonally adjusted. Wages and salaries increased 1.1% and benefits increased 1.1% from December 2023. Compensation costs increased 4.2% in the 12 month period ending March 2023. The ECI is considered to be the gold standard in assessing wage price pressures in the economy. Similar to previous releases, there are a few key points to note. Unlike last quarter, the print came in a fair bit higher than expectations which had called for a 1.0% increase. Relatively strong economic data for the past 3-6 months and hotter-than-expected inflation prints have caused a surge in nominal bond yields. Consumer expectations of medium and long term inflation expectations, even though well anchored, continue to remain above pre-pandemic levels. All these factors together are causing angst in the markets, particularly from the perspective of future path of monetary policy a.k.a when will rate cuts actually materialize?! In this backdrop, a higher than expected ECI print is very noteworthy. Powell’s speech on Fed day when he clearly ruled out any rate hikes and a softer than expected headline Q1 GDP print have probably offset the effect ECI would have otherwise had on yields. Yet, it is also key to remember that even though this ECI print was hot, there still don’t seem to be wage price spiral pressures in the economy. Lastly, inflation adjusted compensation costs have now been above 0% for most of 2023 and the year so far. This should also continue to put upward pressure on inflation. However, this number (+0.8%) is also in line with pre-pandemic levels (when inflation was relatively stable and below the Fed’s target)

31st Jan 2024

Key takeaway: The latest Employment Cost Index data for Q4 2023 showed compensation costs of civilian workers increased 0.9% seasonally adjusted. Wages and salaries increased 0.9% and benefits increased 0.7% from September 2023. Compensation costs increased 4.2% in the 12 month period ending December 2023. The ECI is considered to be the gold standard in assessing wage price pressures in the economy. Similar to previous releases, there are a few key points to note. Unlike last quarter, the print came in slightly lower than expectations which had called for a 1.0% increase. Coupled with a weak ADP jobs print released a few minutes earlier the same day, the reception to the softer ECI data was decidedly more bearish. More importantly, at 4.2% y-o-y, the ECI is still substantially higher than pre-pandemic averages of around 2.0-3.0% but coming down from the highs of 5% seen through most of 2022. However, even though the number remains higher than pre-pandemic averages, softer CPI and PCE numbers for the past several months have reduced the risk or weightage that the Fed would have otherwise assigned to a 4.2% ECI number. There just don’t seem to be wage price spiral pressures in the economy. Similarly, it is also key to look at real wage increases compared to nominal wage increases. For instance, the y-o-y ECI increase on a nominal basis was 4.2% in December 2023 compared to 5.1% in December 2022. However on a real basis, the y-o-y change in ECI was 0.9% in December 2023 compared to -1.3% in December 2022. This leaves consumers with more real purchasing power and hence can keep the fire burning under the strong consumption story. It is also important to note that this constant dollar y-o-y change has in fact increased from 0.6% in September 2023 to 0.9% in December 2023.  

31st Oct 2023

Key takeaway: The latest Employment Cost Index data for Q3 2023 showed compensation costs of civilian workers increased 1.1% seasonally adjusted. Wages and salaries increased 1.2% and benefits increased 0.9% from June 2023. Compensation costs increased 4.3% in the 12 month period ending September 2023. The ECI is considered to be the gold standard in assessing wage price pressures in the economy. There are a few key points to note. First, the print came in slightly higher than expectations which had called for a 1.0% increase. More importantly, at 4.3% y-o-y, the ECI is still substantially higher than pre-pandemic averages of around 2.0-3.0% and hence indicative of wage price inflationary pressures in the economy. However, the most important point in my view, is the real wage increase compared to the nominal wage increase. For instance, the y-o-y ECI increase on a nominal basis was 4.3% in September 2023 compared to 5.0% in September 2022. However on a real basis, the y-o-y change in ECI was 0.6% in September 2023 compared to -2.9% in September 2022. This leaves consumers with more real purchasing power and hence can keep the fire burning under the strong consumption story. It is equally important though to note that this constant dollar y-o-y change has moderated from 1.6% in June 2023 to 0.6% in September 2023.  

28th July 2023

Key takeaway: The latest Employment Cost Index data for Q2 2023 showed compensation costs of civilian workers increased 1.0% seasonally adjusted. Wages and salaries increased 1.0% and benefits increased 0.9% from March 2023. Compensation costs increased 4.5% in the 12 month period ending June 2023. The ECI is considered to be the gold standard in assessing wage price pressures in the economy. Hence, there was relief in the markets when this number came in below expectations. The ECI has moderated significantly from its highs of 1.4% in early 2022. However, it is still above pre-pandemic averages and still indicative of an annual 4%+ wage growth, which is above the comfort threshold of the Federal Reserve. 

The Employment Cost Index measures the change in the hourly labor cost to employers over time. The ECI used a fixed “basket” of labor to produce a pure cost change, free from the effects of workers moving between occupations and industries and includes both the cost of wages and salaries and the cost of benefits. It is usually considered the gold standard for understanding the underlying wage growth trends in the economy. The ECI is a quarterly number and is released at the end of about one month from the end of the quarter.

Employment Cost Index – BLS