Average Hourly Earnings Growth vs 5/1 Adjustable-Rate Mortgage (ARM)

How These Two Indicators Relate

Wage Growth sits in the employment category and 5/1 ARM sits in the rates category, so they describe different parts of the same economy. Watching them together provides cross-checks: a coordinated move in both directions confirms a regime shift, while a divergence often reveals which sector of the economy is leading or lagging.

Both readings are currently moving lower. Wage Growth has moved lower -0.2% since the prior release; 5/1 ARM has moved lower -0.1%. When two related indicators decline together, the move usually reflects a real economic shift rather than measurement noise.

What Average Hourly Earnings Growth Measures

Average hourly earnings measures the year-over-year percentage change in wages for all private-sector employees. It is a key indicator of labor cost pressures and consumer spending power.

Wage growth at 3.8% year-over-year outpaces current inflation, meaning workers are gaining real purchasing power. For executives, this signals continued pressure on labor budgets — compensation packages must grow to retain talent. However, wage growth moderating from 4%+ suggests the worst of the post-pandemic wage spiral may be easing.

Methodology: The BLS calculates average hourly earnings from its establishment survey, dividing total private payroll by total hours paid. The year-over-year change eliminates seasonal effects. It includes base pay but excludes benefits, bonuses, and employer-paid insurance. Source: U.S. Bureau of Labor Statistics (series CES0500000003).

What 5/1 Adjustable-Rate Mortgage (ARM) Measures

The 5/1 adjustable-rate mortgage (ARM) offers a fixed rate for the first 5 years, then adjusts annually based on a benchmark index plus a margin. ARMs typically start with a lower rate than 30-year fixed mortgages, making them attractive for buyers who plan to sell or refinance within 5-7 years.

At 6.17%, the 5/1 ARM offers a modest discount to the 30-year fixed rate of 6.64%. When this spread is narrow (under 0.5%), the risk-reward of choosing an ARM is less compelling — you take on rate adjustment risk for relatively little savings. A wider spread (1%+) makes ARMs more attractive. For real estate investors and corporate relocation programs, ARMs can reduce carrying costs on properties held for short periods.

Methodology: Freddie Mac surveys lenders weekly. The 5/1 ARM rate reflects the initial fixed-rate period offered to well-qualified borrowers. After the 5-year fixed period, the rate adjusts annually based on the Secured Overnight Financing Rate (SOFR) index plus a lender margin, subject to periodic and lifetime caps. Source: FRED at the St. Louis Fed (series MORTGAGE5US).

How These Comparisons Are Built

Each pairwise comparison page is statically generated from the live indicator dataset — values, trends, and source links are pre-rendered into HTML at build time. When the underlying dataset refreshes (each indicator on its own publication schedule), the comparison page regenerates automatically. ExecBolt does not estimate, model, or interpolate any reading; every value comes from the publishing agency’s primary release. For the full sourcing approach, citation format, and known limitations, see the methodology page.

For plain-language guides to the concepts behind Wage Growth and 5/1 ARM, see the learn library. For tools that translate macro readings into business outputs (DCF, runway, break-even), see the calculators page. Authoritative external context comes from the Federal Reserve’s FRED database, the U.S. Bureau of Labor Statistics, the U.S. Bureau of Economic Analysis, and the SEC EDGAR system.

Frequently Asked Questions