Nonfarm payrolls: why wages remain weak? - Scotiabank

Analysts at Scotiabank explained that ahead of FOMC Chair Yellen’s testimonies to Congress this week, the Fed Reserve released its July 2017 Monetary Policy Report to the Congress on Friday (7 Jul).

Key Quotes:

"The report continued an upbeat outlook for the US economy with jobs and economic growth progressing at a steady pace on the back of healthy investment and consumer confidence while fiscal policy as currently enacted would have roughly neutral impact on GDP growth this year."

"The Fed in the report, sees only moderate signs of risk in financial markets. According to the report, "Vulnerabilities in the US financial system remained, on balance, moderate…Valuation pressures across a range of assets and several indicators of investor risk appetite have increased further.

However, these developments in asset markets have not been accompanied by increased leverage.” The Fed did highlight some longterm problems as it noted that weak productivity growth may become entrenched as a “new normal,” and could be one reason wage growth remains weak."