Edwin Lopez sorts money in the cash register at Frankie’s Pizza on January 12, 2022 in Miami, Florida.
Joe Raedle | beautiful pictures
Goldman Sachs chief economist said it would be difficult to sustain wage growth between 5% and 6% without triggering “significantly high” inflation.
Jan Hatzius told CNBC on Tuesday that wage growth in the US needs to slow, as inflation heats up and becomes a focus for the Fed and markets.
“I think 4% is fine. 5% to 6% is probably hard to sustain without meaningfully higher inflation for that to need to come down,” Hatzius added.
Hatzius, who is also head of global investment research at Goldman Sachs, said quarterly wage growth has been “well above” 4%.
“The pace of wage growth that we’ve seen over the past few quarters probably needs to slow down a bit,” he told CNBC’s “Squawk Box Asia.”
Overall, The average salary in the US has increased significantly in 2021 – over $31 an hour, up 4.7% year on year, US Department of Labor report in early January.
In the first day of this month, Goldman Sachs “There’s real wage inflation everywhere,” said CEO David Solomon. Compensation costs at Goldman 33% increase to $17.7 billion for 2021, a whopping $4.4 billion increase was driven primarily by pay raises for good performance, executives said.
Meanwhile inflation is increasing with US consumer price index rose 7% in Decemberfastest rate since June 1982.
Higher consumer prices are eating raise wages for workers despite their reduced wages. Effectively, the average worker took a 2.4% pay cut last year, follow to seasonally adjusted data released by the Department of Labor.
The six largest US banks – JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, Morgan Stanley and Goldman Sachs – raised wages in 2021 and then raised their cost forecasts for next year, according to a Reuters report.
Hatzius, however, is optimistic that wage inflation will subside.
“I think there’s some reason to believe that’s probably going to go down because there’s some evidence … from surveys of businesses about their expectations for a raise, that some recent gains [are] many bonuses maintain one-time, one-time only and things that won’t necessarily repeat,” he said. But I think it’s an important thing to keep an eye on. “
