Courtesy of Mish.
Economists keep expecting a big boom in consumer spending. They also expect a huge wage-price spiral. I expect neither. Let’s investigate.
Bright Outlook for Consumers?
Following today’s job’s report, Econoday commented on wages and tight labor conditions.
Tight conditions haven’t yet sparked much pressure in average hourly earnings which did rise a respectable 0.3 percent in the month though the year-on-year rate fell 1 tenth to a very soft 2.5 percent. How long wages can stay quiet given the lack of available labor is an open question.
In February, Jim Glassman, head economist for JPMorgan, forecast a Bright Outlook for Consumers.
Stronger household finances are laying the foundation for a sustained boom in consumer spending. The improving job market has lifted incomes across the board, while shrinking debt burdens and falling energy prices are freeing up disposable income. The stock market’s rally and real estate’s recovery have helped households more than regain the wealth erased by the recession, placing American consumers in a stronger position than ever before. And since consumer spending accounts for nearly 70 percent of American GDP, a sunny outlook for the nation’s consumers could boost overall economic output in 2017.
Congratulations!
Today’s job report shows average hourly earnings of production and nonsupervisory workers are $21.96 vs $21.46 a year ago.
For my take please see April Payrolls Bounce, Revisions Take March Lower: Hiring Increasingly Volatile.
Think you are you getting ahead?
