Post Tagged with: "wages"

Some thoughts on the Walmart minimum pay increase

Some thoughts on the Walmart minimum pay increase

Walmarts plan to raise the minimum pay for some employees to $11 an hour is big news. I also think this is good news for Trump and the Republicans as well as for wage rates in the US.

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Jobs report adds no new information about economy; Fed still on track for 3 hikes in 2018

Jobs report adds no new information about economy; Fed still on track for 3 hikes in 2018

The US Labor Department released a very ho-hum jobs report this morning, showing the unemployment rate in line with expectations at 4.1%, but with the economy only adding 148,000, below the 190,000 expected. Overall, the report provided no new information on the pace of wage growth or the tightness of the labor market and can largely be discounted.

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Wages might finally be beginning to rise

Wages might finally be beginning to rise

The Wall Street Journal has a piece out about wage rates in the tightest urban markets like Minneapolis. And what they found is that wages rates in these markets is beginning to rise. That doesn’t mean inflation will rise. However, it does put more pressure on the Fed.

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Some thoughts on systematic central bank policy errors

A recent post by Matthew Klein on central banks over at FT Alphaville that dovetails with some of the themes I have been writing about here at Credit Writedowns for the past decades is what preciputated this post. Let me summarize my thesis and tell you why it matters. Here are the bullet points – focused here mostly on the US.

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Personal income data shows the US economy on track

Personal income data shows the US economy on track

Yesterday’s release of the Personal Income and Outlays data showed personal income increasing 0.4% in January, ahead of expectations. The numbers demonstrate that the US economy continues to expand at a solid if unspectacular pace. The decline in personal consumption growth is the challenge for continued growth in the US economy with the Fed set to hike rates.

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Some incomplete comments on the current US economic environment

Some incomplete comments on the current US economic environment

This is going to be a quick hit post to get some thoughts down on paper because a few threads are coalescing for me that I want to give some coherence to. The essence of the threads revolves around the tension at the Fed between normalizing policy and the ability of the economy to withstand it. My view has been upbeat about the US economy – and that’s been without a trace of recession worry for the last several months. But there are some negative factors coming together that give me pause. And it begins with housing.

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Republican presidential candidate Donald Trump speaks to supporters as he takes the stage for a campaign event in Dallas, Monday, Sept. 14, 2015. (AP Photo/LM Otero)

If Donald Trump remains a cultural warrior, he will fail

Early on in President Trump’s new administration, too much of his energy is being placed on divisive ‘cultural’ issues and not enough attention is being paid to economic policies. To the degree Trump has turned to the economy, much of his policy has been focused on issues that will not yield long-term economic benefits but contain considerable risk, like trade with Mexico and China. And so, while Donald Trump is only a few weeks into his presidency, I think we can begin to take stock of what his presidency will mean for the US economy.

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Demographics are driving wages lower, which is negative for investment returns

Demographics are driving wages lower, which is negative for investment returns

For managers of money, the post-crisis low growth world has had major implications for asset allocation strategies. Assumptions about returns are greatly affected by the both monetary easing used to counteract the slowing and the yield curve flattening indicative of that easing’s ineffectiveness. Recent research on demographic trends and wage growth suggest trends now in place may continue, with grave implications on returns.

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Monetary policy is at the end of the line

Monetary policy is at the end of the line

The last few days have made clear that monetary policy is having less and less impact as time goes along.In particular, the latest salvos from the Bank of Japan smack of desperation, as if BOJ Governor Kuroda has decided to throw everything but the kitchen sink into his grab bag of unorthodox monetary policy. Because the Bank of Japan is so far along the curve toward both secular stagnation and unorthodox policy to counteract that slowing, we should pay attention to how their experiments go. I do not expect good results.

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Democratic values in the EU and the rise of the German right wing

Democratic values in the EU and the rise of the German right wing

In the United States, the Republican Party is baffled by how their electorate has favoured Donald Trump for nomination for President in 2016. Equally, the Democrats are scurrying to quell the massive inflow of votes to Bernie Sanders, whose message resonates with the disaffected. But this disaffection is not isolated to the US. Everywhere one looks in Europe, new, alternative and fringe candidates are getting record support. I want to talk about this in the German context because a broadcast by German public TV makes clear that the rising tide of discontent is everywhere, even in countries like Germany that are doing relatively well.

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The Greece debt bailout negotiations are really about France, not Greece

The Greece debt bailout negotiations are really about France, not Greece

The situation in Greece is not about Greece at all. It is about enforcing an economic framework onto all Eurozone countries. And because the policy goal is primarily about enforcing this economic framework everywhere in the eurozone, there is less policy space available for compromise. It is this fact that makes the Greece government debt bailout negotiations so difficult.

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US: Failure of borrow to spend means susceptible stall speed economy

US: Failure of borrow to spend means susceptible stall speed economy

Yesterday, the big news for US data was poor post-winter retail sales. I believe US consumption growth still supports a 2 or even 3%ish level of GDP growth. It is actually elsewhere where the US economy has shifted down: inventories, capital expenditure and trade. The US economy is, therefore, now at stall speed, susceptible to a decline in borrow to spend-related consumption. We should take a June rate hike completely off the table now. Even a summer rate hike has to be in jeopardy.

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