Employment results released this morning (11/2/18) continues to look great once again. Not only has the US reached a level of employment not seen in history but this morning’s news adds to those positive stats with US wage gains of 3.1%. This is the best result for wages since 2009 and is an indication that Americans will have more money in their pockets. This increase in wages has been long expected due to the full employment levels and tight labor market here in the US.
While this is good news, there are those who still worry about possible negative impacts from US worker wage gains.
- There are those who worry that wage increases mean the US Fed will continue raise interest rates and harm the economy. However, US interest rates are at historical lows and worker wage increase will result in increased spending thus prompting consumer spending. Over the long run, that is a good thing for the economy provided productivity continues to increase across the economy.
- Some think that a tight labor market means that US business cannot expand due to shortage of workers. Again, this risk is mitigated so long as productivity keeps increasing. This means that workers are getting more efficient and producing more through automation and production improvements and thus business will continue to expand.
There are some real outside challenges to the US economy. The world economy has slumped in both Asia and Europe and continues to trend downwards. Many US corporations are global in nature and this situation will definitely have negative impact on US exports. Another challenge related to the global economy is the strong US Dollar as it climbs in value over weakening foreign currencies. The trade issue between US and China is also having a negative impact on the Chinese economy even while the US economy improves. While the specific economic performance of the world is mostly out of our hands, the US-China trade relations is mostly under the control of the US. A breakthrough in trade talks and the signing of a trade deal could see the US economy breaking out to a higher level than the already excellent levels we are experiencing now.
On a funny side note, Obama campaigned in Pennsylvania this Halloween week claiming that this was “My economy…” and that he created the great economic environment. This was the same guy who said “This economy is as good as it gets, this is the new reality, get used to it…” while he was in office. The same POTUS who increase the Federal debt by $1 trillion dollars with nothing to show for it except continued declines in capital spending by US corporations the whole time while he was in office. The same administration who increased taxes on corporations, significantly increased business regulations and the size of government agencies, and oh by the way, the economy and business spending and revenues started going up only after Trump came into office and overturned all of Obama’s regulations and lowered the corporate tax rate. Sure it’s your economy Barrak, now go sit down and carry on with your mud pies.
