The average hourly earnings for private nonfarm payroll employees have decreased, according to a December 2, 2011 press release by the Bureau of Labor Statistics.
The recent $23.20 average hourly earnings has decreased to $23.18. The decrease of 2 cents per hour, or 0.1 percent of the rate, has come after a continuous gain of 1.8 percent over the last 12 months.
The recent decrease in hourly wages after a steady increase over the last 12 months could indicate that growth in the economy has tapered off. This slowing could result in a more stable and predictable economy. If the months continue to show material fluctuation in hourly wages economists and consumers the economy may grow more confident about the economy.
If consumers are less concerned regarding their own employment and ability to retain their own job, they may increase consumer and borrowing. These changes, in turn, could motivate banks and private sector investment companies to lend and invest funds. In fact, consumers spent record highs in terms of spending on Black Friday and Cyber Monday this year, a sign that more people are feeling comfortable with their economic position.
However, if the next few months indicate a steady decrease in the average hourly earnings, consumers will likely be more concerned about their employment prospects and will feel less confident in spending. This decrease in confidence will likely lead to a decrease in overall economic activity. Investors and lending institutions would be less likely to loan or invest funds in an uncertain market. Interest rates would likely rise to compensate for an increased risk of investment.
Since the average hourly wages have decreased slightly, economists will continue to monitor this statistic to determine whether the economy has stabilized or if a decline in the economy is more likely to occur. They will also look at other data to gauge the health of the economy, including the unemployment rate, inflation, value of the American dollar, and the consumer confidence level as determined by the amount of consumption that takes place over the upcoming holiday season.
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