"we maintain our outlook of expansion for the U.S. economy in the coming year… The ClearBridge Recession Risk Dashboard experienced one change at the end of January, with Wage Growth moving to yellow [cautionary].
...Wages represent the greatest component of income for most Americans, and higher wages can be good for consumption and the economy broadly as individuals have more dollars to spend. However, rising wages can also put pressure on corporate margins if productivity doesn’t keep pace, ultimately leading to inflationary pressures with companies having to raise prices to maintain profitability.
Wage growth rising above 4% on a year-over-year basis has predated each of the last three recessions over the past three decades. While wage growth has not yet reached this level, wage gains have accelerated over the past several months. Specifically, wage growth ranged from just below 2% and 2.5% beginning in the early part of the current recovery (around 2011) through the end of 2017. Last year saw wage growth in the 2.5% to 3% range for much of the year, before moving into the 3% to 3.5% range as cold weather set in. ... While current wage growth levels are not yet consistent with those experienced just ahead of past recessions"
(Inflationary Pressures Building Dated 02/04/2019 by Jeff Schulze, CFA & Investment Strategist with ClearBridge Investments)