evidence: Released on January 31, 2024, the U.S. Bureau of Labor Statistics’ 12-month growth rate of employer costs for employee compensation has exceeded consumer inflation for the third quarter in a row, despite declining to 4.2 percent in Q4 2023 from its 2022 high of 5.1 percent (Chart 1, Table 1). Remaining above the general price inflation experienced by U.S. households (CPI) for three quarters running reflects a solid reversal of the previous eight-quarter period of employee purchasing power erosion. [...] Softening of the overall ECI has been driven by the private sector. The 12-month growth rates of government sector wages and salaries and benefits have exceeded those in the private sector for three quarters. The ECI for government sector wages and salaries has remained essentially flat at 4.7% since December 2022. For private sector employees, the 12-month employment cost index for wages and salaries has declined steadily from its 5.7 percent peak in Q2 (June) 2022, with the ECI for benefits declining even more. It is important to note that the 12-month growth rate of the cost of government employee benefits has demonstrated a second quarter of notable decline. Government sector compensation responds more slowly to economic changes than does private sector compensation. Private sector compensation rose sooner in response to rising inflation beginning in 2021. That growth rate is now falling faster as inflation eases. The softening of benefit cost increases in the government sector may suggest the growth of wages and salaries in the government sector will begin a slowing trend.