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U.S. wage growth experienced its smallest increase in over three years during the third quarter, reflecting a slowdown in wage growth and suggesting that inflation is firmly on a downward trend, a finding that won’t help Vice President Kamala Harris convince voters she’d be better on the economy than former President Donald Trump.

According to the Labor Department’s Bureau of Labor Statistics, the employment cost index (ECI), the broadest measure of labor costs, rose by 0.8% last quarter. It marks the smallest gain since the second quarter of 2021 and follows an unrevised increase of 0.9% in the second quarter, Reuters reported.

Economists surveyed by Reuters had anticipated a 0.9% increase in the ECI. Labor costs increased by 3.9% in the 12 months leading up to September, the smallest rise since the third quarter of 2021, down from a 4.1% increase in the year through June. Annual labor cost growth has decreased from 4.3% in September 2023.

The ECI is regarded by policymakers as a reliable indicator of labor market slack and a predictor of core inflation, as it adjusts for changes in composition and job quality. The Federal Reserve aims for a 2% inflation target.

Government data released on Wednesday revealed that core inflation rose at its slowest pace in nearly a year during the third quarter. Last month, the Fed initiated its policy easing cycle with an unusually large half-percentage-point interest rate cut, marking the first reduction in borrowing costs since 2020, Reuters added.

The Fed’s policy rate is currently set in the range of 4.75% to 5.00%, following a cumulative increase of 525 basis points in 2022 and 2023. A further rate cut of 25 basis points is anticipated next Thursday.

Wages and salaries, which represent the majority of labor costs, only increased by 0.8% last quarter, following a 0.9% rise in the second quarter. On an annual basis, they rose by 3.9%, a slowdown from the 4.2% increase recorded in the April-June quarter.

A CNN poll taken immediately after the debate between Trump and Harris in September found that the percentage of voters who trust the former more than the VP on the economy jumped from +16 percent to +20 percent.

CNN’s Jake Tapper introduced the poll, saying, “The first results of our instant poll of debate-watchers have just come in and David Chalian is going to join us now to break it all down. David, tell us more.”

“Yeah, Jake, and as you noted, this is a poll of debate watchers,” Chalian pointed out. “This is not a poll that represents the overall population, although in partisan breakdown, it is pretty close to what the overall registered population looks like in the country.”

Later in the segment, Chalian presented the results of a poll asking viewers which candidate, Trump or Harris, they trusted more on the economy. While Trump had a 16-point advantage over Harris before the debate (53%–37%), his lead had increased to 20% (55%–35%) during the discussion.

During the debate, Trump stated, “We’ve had a terrible economy because inflation has — which is really known as a country buster. It breaks up countries. We have inflation like very few people have ever seen before. Probably the worst in our nation’s history. … everybody knows I’m an open book. Everybody knows what I’m going to do. Cut taxes very substantially. And create a great economy like I did before. We had the greatest economy.”

As noted by The Daily Wire, voters have indicated for months that the economy is a top issue:

–September 10: CBS News: “About 8 in 10 adults tell CBS News that the economy is a major factor in their choice at the polls, outpacing issues such as abortion and climate change.”

–The Economist/YouGov poll, August 11-13: 73% of those polled said jobs and the economy were very important to them, far surpassing any other issue.

–July 30: Statista: “A survey conducted in July 2024 found that the most important issue for 25 percent of Americans was inflation and prices. A further ten percent of respondents were most concerned about jobs and the economy.”

–March 6: Data For Progress noted that between July 2023 to February 2024, inflation “held the top spot for the majority of the time” among issues important to voters.

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