Posts Tagged ‘wage inflation’

Notes From Underground: The Jobs Picture Is Robust, But Where Is the Wage Increase?

December 8, 2019

This is a rhetorical question of course, for the lack of wage growth is to be found in the vast amount of money chasing a global labor pool.

It is capital that had benefited from the last 30 years of the unleashing workers after the fall of the Soviet Empire and the black/white cat policies of Deng in pursuing growth in China. Now that other emerging economies are attracting capital in an effort to create jobs, there still remains a great deal of downward pressure on wages. Even the movement of supply chains out of China will act as a drag on global earnings as manufacturers will act to hold down wages as way of remaining attractive to foreign direct investment. The world has been watching as Chinese earnings growth has accelerated over the last 10 years but one of the outcomes from the Trump tariffs will be to force a slowdown in China’s wage inflation.


Notes From Underground: Quick Note on Friday’s Jobs Report

April 4, 2019
On Friday we have U.S. and Canadian employment. The Canadian report is important because Canada is an important trading partner of the U.S. so any slowing in Canadian employment may reflect of slowing cross-border trade. The consensus is for Canada to have a DECLINE of 10,000 jobs with the unemployment rate holding at 5.8 percent. From a global perspective, Canada is a good look at the continuing narrative about slowing global economy, which is significant as the New Zealand, Australian, European and Japanese central banks have used the slowing global economy as the reason for maintaining their current accommodative monetary policies. The Canadian dollar has been weak versus many of the key currencies so weak jobs should put more pressure on the Canadian dollar.


Notes From Underground: Like Kevin McCarthy’s Cameo in the Remake of Invasion of the Body Snatchers

March 16, 2016

I TOLD YOU THEY WERE COMING. When Janet was named FOMC Chair I wrote a piece about Ms. Yellen not being a friend of Wall Street as she was first and foremost a LABOR ECONOMIST. When she took the FED reins corporate profits (as a percentage of GDP) were more than 11%, around all-time highs. I opined that Chair Yellen would prefer to see wages rise and corporate profits fall so as to adjust the economic balance toward labor and away from KAPITAL. In today’s FOMC statement I believe that Yellen let it be known again that inflation running hot may be beneficial if it results in higher wages. The sense of the FED was so transparent that even Diane Swonk actually raised the issue rather than performing her typical lap dog tricks and heaping unwarranted praise upon Yellen. Swonk poignantly said the underbelly of the economy and the Fed was revealed. She also said very clearly that Yellen and her husband were both labor economists. Scott Minerd also supported this view. In backing up Swonk’s analysis, Minerd noted that Yellen appears ready to overshoot on inflation as “she wants to see wage rises sustained.”