National Average Wage Index - NAWI

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DEFINITION of 'National Average Wage Index - NAWI'

An index calculated annually by the Social Security Administration (SSA) based on wages subject to federal income taxes and contributions to deferred compensation plans. The National Average Wage Index (NAWI) is used by the SSA in the indexation of retirement and insurance benefits in the United States.

INVESTOPEDIA EXPLAINS 'National Average Wage Index - NAWI'

The national average wage is calculated by taking the previous year's amount and increasing it by the percentage increase in wages over the last year. This data provides investors with valuable information to let them know what the workers in the nation are making.

This statistics provides insight into the direction of wage trends, which can have an effect on wage inflation, which could cause the fed to raise rates to curtail it. Raising interest rates will have a negative effect on bond and equity markets. Alternatively, if wage inflation seems to be decreasing, the Fed may lower rates, which would have positive effects in the markets.

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