Volatility in financial markets from problems in Italy and tariffs masked the strong economic data. The data continues to get better and better. Last week was headlined by the labor market report. Job growth at 223,000 was well above expectations and the monthly average of the first four months of the year. The growth in the labor force has slowed as more or those looking for work have found jobs. As a result, the unemployment rate dropped from 3.9% to 3.8%. More importantly, average hourly earningsincreased by 0.3% for the month of May. This is the third out of the first five months of the year where wage gains were this high. The tight labor market is beginning to force companies to raise wages in order to retain or attract the workers they need given the rise in final demand that has occurred. We have been forecasting this upward pressure on inflation from rising labor costs. The labor report was not the only data reported as strong. Personal spending was up in April and the core PCE price index rose by 0.2%…

ProBank Austin Advisor – June 4, 2018