February 2, 2018

Pay growth fears strong but unfounded

The Week Ending Friday February 2nd 2018 A terrible Friday for equities and bond prices topped off a poor week overall. Some cooling off for equities from the super start to 2018 was probably inevitable. On top of a natural tendency to pause, some spurious hourly wage growth data on Friday seriously spooked markets. The All Private Employees Average Hourly Earnings growth hit 2.9% YoY for the first time since the recession. However, this 12-year old data series includes a lot of higher paid managers and professionals, who are definitely not hourly paid employees. Thus, the hourly earnings figure cannot… Read More


The Employment Report: Yellen´s last

Economists call accelerating wages ‘best news’ in January jobs report. However, wage growth for 80% of workers (production & non-supervisory) has been stuck for quite some time. The panel shows what a non-inflationary boom looks like. Low inflation and falling/low unemployment in both cases. However, a real boom sees a robust growth in hourly and weekly earnings. During Yellen´s tenure, the overall labor force participation rate remained flat as a pancake after dropping significantly following the Great Recession. Meanwhile, prime age worker participation showed a slight increase halfway through her mandate but has flattened again. There was nothing special about… Read More