US: Undershooting unemployment & wage growth - SocGen

Sandeep Kanihama FXStreet Contributor

Omair Sharif, Research Analyst at Societe Generale, suggests that although news headlines about the recent FOMC Minutes focused on the Fed’s thinking regarding the impact of fiscal policy, a bigger takeaway for SocGen was the Committee’s concern of the rising risk of a significant undershooting of the long-run unemployment rate.

Key Quotes

“Indeed, many on the Committee noted that they may need to hike faster in order to stem the potential inflationary impact. In our view, that means wage growth will be Committee’s overriding domestic focus in 2017. We suspect that is part of the reason that the jump in December average hourly earnings garnered so much attention. While the rise was certainly encouraging, we would temper the enthusiasm about the December earnings gain being a signal of the long-awaited run-up in wages.”

Author

Sandeep Kanihama

FXStreet Contributor

Sandeep Kanihama is an FX Editor and Analyst with FXstreet having principally focus area on Asia and European markets with commodity, currency and equities coverage. He is stationed in the Indian capital city of Delhi.

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