Core Insights - Wage growth has slowed, with private-sector salaries rising only 0.7% in Q4 2025, the slowest increase since Q2 2021, indicating a shift in the job market favoring employers [1][1][1] - Year-over-year wage growth stands at 3.4%, consistent with Q1 but down from Q3, reflecting a tougher job market as job openings have decreased and unemployment has risen [1][1][1] - The Employment Cost Index's weak growth in Q4 aligns with a broader trend of a softening labor market, leading to reduced pressure on employers to raise wages [1][1][1] Economic Implications - The slowdown in wage growth may prompt the Federal Reserve to consider cutting interest rates to stimulate hiring and mitigate rising unemployment [1][1][1] - Despite the slowdown, average wages are still growing faster than inflation, which rose 2.7% in 2025, suggesting a positive outlook for workers in terms of purchasing power [1][1][1] - Wage growth has not been evenly distributed, with higher-income households seeing a 3.7% increase in after-tax wages, while lower-income households only experienced a 0.9% increase [1][1][1] Job Market Context - The job market is currently facing challenges due to tariffs and uncertainty in trade policy, which have led businesses to reduce hiring and expansion plans [1][1][1] - A forthcoming report from the Bureau of Labor Statistics is expected to provide further insights into job creation and unemployment rates for January 2026 [1][1][1]