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The One Number The Market Is Focused On: Real Hourly Wages Surge Most Since Lehman Deflationary Shock

In today's deluge of macro data, one number stood out: the parallel release by the BLS of the real average hourly earnings, which is simply taking the previously reported nominal hourly wage data, and applying whatever deflator gets released in parallel by the BLS. And, not surprisingly, after the nominal jump in January wages, a number which may very well be revised lower as has been the case so often before, courtesy of the headline deflation, the real jump in hourly wages was even higher. In fact, rising to an inflation adjusted $10.55/hour from $10.42 in December, it meant real wages rose by 1.2%, which was the best jump in hourly wages since... the months following the Lehman collapse. Because everyone remembers how the deflationary vortex in the aftermath of the Lehman bankruptcy led to a sense of wealth and eagerness to spend deflation adjusted wages.

In any event, if indeed Yellen was on the fence with a June rate hike ahead of the wage number, then following today's deflationary data and nominal increase in wages, the case for a rate hike is that much stronger.

 

On a monthly and annual basis:

 

And the reaction...