As the U.S. moves beyond full employment, wages could be set to finally increase in 2018, according to Goldman Sachs.
Speaking to CNBC at Goldman Sachs' European headquarters in London, Goldman's Chief Economist Jan Hatzius outlined an average hourly earnings growth forecast of 3 percent for 2018, compared to 2.5 percent over 2017.
"3 percent (growth) I think is a reasonable expectation over the next 18 months, 3.5 (percent) is probably at the top end of what I think is plausible," he said.
On Friday, the Bureau of Labor Statistics released its nonfarm payroll numbers, a monthly measure of job and wage growth in the U.S. The figures were generally received as disappointing, with a mere nine cent increase in average hourly earnings to $26.63 in December. The year's increase in average hourly earnings was 65 cents, a relatively low figure considering the strong performance of the country's economy.
"We expect the unemployment rate to fall to 3.5 percent by the end of 2018," Goldman Sachs said in a research note late last month. "If so, both wage growth and price inflation are likely to move higher." The investment bank said that wage growth disappointed somewhat in the last year, but predicted that 2018 will see a "renewed acceleration."
Full employment, in economic terms, means that unemployment has reached the lowest possible level that won't trigger inflation — for the U.S., that's around 5 percent.