Newspaper article THE JOURNAL RECORD

Wage, Salary Growth Clocked at 4.1% in 2nd Quarter

Newspaper article THE JOURNAL RECORD

Wage, Salary Growth Clocked at 4.1% in 2nd Quarter

Article excerpt

WASHINGTON (AP) _ Americans' wages and salaries rose at an annual rate of 4.1 percent over the last three months as paychecks grew faster than inflation for the second straight quarter, the government said Tuesday.

It was the first time since 1986 that Americans enjoyed back-to-back wage gains outpacing increases in the cost of living, the Labor Department reported.

Analysts said the improved buying power could help buoy an economic recovery.

In other bright news, new home sales resumed their rebound, jumping 7.4 percent. Sales advanced in every region except the South, where they slipped 0.5 percent, according to the departments of Commerce and Housing and Urban Development.

On a negative note, a survey on consumer confidence found that Americans remained uncertain about the economy in July, an indication that the recovery may be far from robust.

The economy, in a recession since last summer, started growing again in the April-June quarter, but only at a modest annual rate of 0.4 percent.

The Labor Department's employment cost index showed that wages and salaries paid by private industry during that period grew 1.0 percent, or at annual rate of 4.1 percent.

That means workers' wages rose faster than the cost of living, because inflation during those three months ran at an annual rate of 2.8 percent.

Likewise, in the first quarter of 1991, workers' wages were ahead of inflation. It marked the first time since 1986 that wages, for two consecutive quarters grew faster than consumer prices, the department said.

"If wages can stay ahead of inflation, that could help sustain our expansion ... by giving workers more money to spend without having to borrow or dip into savings," said Allen Sinai, chief economist at the Boston Co.

"The report shows pluses everywhere. ... There is a very tough-minded business sector in terms of cutting costs (and) workers are doing better,"

Sinai said.

The overall employment cost index, which measures both wages and benefits, rose 4.6 percent for the 12 months ending in June, a slower advance than the 5.4 percent increase for the year ending in June 1990. The overall index counts workers in government and private industry. …

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