Wage drop not the beginning of a trend: Economist
Americans' average hourly wages may have decreased in December, but JPMorgan's chief U.S. economist, Michael Feroli, told CNBC on Friday that he thinks the figures look a "bit flukey" and are probably not the beginning of a trend.
"It's really at odds with a lot of other things we're seeing as it relates to wage growth" like recent household surveys of income expectations or business surveys of income growth, he said in an interview with " Street Signs ."
"I don't want to fight the data but there are too many suspicious things there for me to think that that's the beginning of a trend."
Average hourly earnings declined 5 cents in December, dropping from $24.62 an hour to $24.57, according to the Bureau of Labor Statistics.
However, the U.S. economy created 252,000 jobs in December and the unemployment rate fell to 5.6 percent.
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Feroli said the unemployment rate is falling faster than the Federal Reserve expected and that will keep the central bank on track for a midyear rate hike.
He also noted that real earnings could actually be rising.
"Even if wages aren't growing really fast, prices are going down so real spending power is going up," Feroli said.
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Claude Davis, president and CEO of First Financial Bank, also doesn't think the decline in wages will continue.
In fact, he said he's seeing 2-3 percent wage growth across his client base.
His loan portfolio, which is just under $5 billion, has grown 7 percent since the end of 2013. Lending is one of the single-biggest predictors of future outcomes of the economy.
"We're seeing the consumer very strong," Davis said, noting that the bank is experiencing very low delinquency rates.
"On the small-business side, one of the things we're really encouraged about is our commercial clients are actually doing very well. Their creditworthiness is probably as high as it's been, I think, since well before the crisis."
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However, for Marc Morial, CEO of the National Urban League, the wage rate is what's causing many Americans to feel like the economy is not recovering.
"This is why I continue to believe that increases in the minimum wage are important and investments in industries like construction through an infrastructure bill would also help because this is also about creating jobs in those parts of the economy where wages tend to be higher," he said in an interview with " Power Lunch ."
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Ron Christie, CEO of Christie Strategies and a former special assistant to President George W. Bush, is concerned about the slight drop in the labor force participation rate to 62.7 percent from 62.9 percent.
"This is exactly where it was in February 1978," he said on "Power Lunch." "The reason that the unemployment rate dropped of course is that you had thousands of people who decided that they could no longer find a job or they were not in a position to obtain a job."
Christie is pushing for approval of the Keystone XL oil pipeline, which he said would create jobs. On Friday, the House passed legislation approving the pipeline's construction. The bill, which the White House has threatened to veto, now moves to the Senate.
