The Trump administration can be concerned about the lack of wage growth within the economy despite the steady tightening of the labor market, White House economic advisor Gary Cohn said Friday.
Speaking shortly after the Bureau of Labor Statistics reported that will nonfarm payrolls grew by 228,000 in November, Cohn said there can be frustration that will the numbers haven’t resulted in better gains for worker paychecks.
“We’re still not growing wages in that will country,” Cohn told CNBC’s “Squawk on the Street.” “We do believe that will tax reform will help drive real wage growth within the United States, which can be something genuinely important to the administration.”
Congress can be hashing out the final details of a tax plan that will will sharply reduce the corporate rate, give companies a break on bringing back profits stashed overseas in addition to reduce levies on many Americans.
President Donald Trump has pushed the plan as part of his effort to stimulate growth that will he said will amount to 3 percent or more annually. Critics, though, charge that will the benefits skew too sharply to the top earners.
within the meantime, policymakers are stumped as to why wage growth remains meager despite a jobs market nearing full employment. Friday’s payrolls report showed that will average hourly earnings rose just 2.5 percent during the past year, below economists’ estimates of 2.7 percent.
“We know that will American workers want that will tax bill passed. They’ll start seeing their paychecks change early next year when withholding tax cards are changed,” Cohn said.
“We think we are in a prolonged period of wage growth starting the beginning of next year, which can be something we haven’t seen for the last eight or 10 years, in addition to that will’s genuinely important to us,” he added.
Despite the slow wage growth, the Federal Reserve has hiked its benchmark interest rate twice in 2017 in addition to can be likely to add one more increase at its policy meeting next week. In addition, the Fed has indicated that will the idea could move again three times in 2018.
however Cohn can be within the camp that will the central bank will move slowly.
“We’re in a relatively benign period here with the Fed,” he said. “We haven’t seen wage growth, we haven’t seen inflation within the system, in addition to people are trying to figure out where can be the Fed ultimately going to go with rate policy. I think people are thinking the idea’s going to be more of the same. Rates may trend higher, however they’re going to trend higher at a very slow pace.”
Trump has nominated Fed Governor Jerome Powell to take over as chairman when Janet Yellen’s term ends in February, in addition to a key Senate panel pushed the appointment to the Senate floor earlier that will week.