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The economy is growing but it doesn't appear to actually be flowing back into most citizens pockets. The unemployment rate is very low but wages aren't rising.

by lovich 8y ago

The economy is growing but it doesn't appear to actually be flowing back into most citizens pockets. The unemployment rate is very low but wages aren't rising. Anecdotally, I am seeing more help wanted signs on retail and restaurants near me, but my friends who work those jobs are moving _farther_ away from work due to increasing rent without increasing pay. That doesn't seem sustainable

compcoffee 8y ago
>The unemployment rate is very low but wages aren't rising. ...yet. Wages are a driver of inflation, which will rear its head as we reach late cycle. Then we blow up and start over. This is the way of the world.
joefranklinsrs 8y ago
Could you link something that supports your opinion? As for me: US consumer confidence surges in August to 18 year high. https://www.theguardian.com/business/2018/aug/29/us-economy-second-quarter-revised-report-figures https://www.theguardian.com/business/2018/aug/29/us-economy-.... Consumers wouldn't be spending if they didn't have extra cash in their pocket, and they expect the economy to stagnate/decline
- simplemts 8y ago
  "Consumers wouldn't be spending if they didn't have extra cash in their pocket, and they expect the economy to stagnate/decline" Debt, leverage, credit cards, loans, home equity lines, etc. Perhaps 2007 is a great teacher about overleveraged consumers "spending money in their pockets". It wasn't real, sustainable, and ended terribly.
- craftyguy 8y ago
  > Consumers wouldn't be spending if they didn't have extra cash in their pocket The entire credit industry would beg to differ.
- tootie 8y ago
  Wage data is well-tracked and is shown to be growing more slowly than inflation. It's possible the high growth in nominal wages are engendering some good feelings, but actual purchasing power is dropping. https://www.washingtonpost.com/amphtml/business/2018/07/12/inflation-hits-year-high-wiping-out-wage-gains-average-american/?noredirect=on https://www.washingtonpost.com/amphtml/business/2018/07/12/i...
  - joefranklinsrs 8y ago
    My theory is that people are moving up to better jobs, after years of job training, education, and depressed demands, after 2008. Which would explain the low unemployment rate. Thus even though the wages for some industries are stagnating/declining, people are moving to better job positions, and thus have more money to spend.
    - tootie 8y ago
      Do you have data? That sounds like speculation. https://www.frbatlanta.org/chcs/wage-growth-tracker.aspx https://www.frbatlanta.org/chcs/wage-growth-tracker.aspx
    - sharemywin 8y ago
      Probably has nothing to do with all the credit consumers and businesses are running up: https://www.cnbc.com/2018/05/21/consumer-debt-is-set-to-reach-4-trillion-by-the-end-of-2018.html https://www.cnbc.com/2018/05/21/consumer-debt-is-set-to-reac... https://www.washingtonpost.com/business/economy/beware-the-mother-of-all-credit-bubbles/2018/06/08/940f467c-69af-11e8-9e38-24e693b38637_story.html?noredirect=on&utm_term=.2029cdea6184 https://www.washingtonpost.com/business/economy/beware-the-m...
      - adventured 8y ago
        No in fact it doesn't. American households are in tremendous shape compared to many of their peers. The household debt burden is at a 15 1/2 year low (household debt as a share of disposable income). [1] Unlike the fake boom of 2004-2008, this one isn't built on a large expansion of household debt. Businesses have levered up some, however business profits are at an all-time high and debt accumulation began to decline in the most recent quarter (the tax changes + Fed rate policies should continue to push toward a decline; companies like Microsoft, Apple and others took on immense debt temporarily to use it to pay out profits to shareholders via debt rather than repatriate their cash at a high tax rate). In fact, the single most interesting thing about this economic expansion, is that we haven't seen a big increase in household debt accumulation vs income, compared to the prior three major expansions (late 1980s, mid to late 1990s, and mid 2000s). That either implies consumers are skittish about unnecessarily taking on debt (trauma from the great recession, very plausible), or there's another very big leg left in this expansion (which would be fueled by debt). "With personal disposable incomes at a $15.46 trillion annual rate in the quarter, the debt-to-income ratio dipped to 86%. That’s the lowest, by an admittedly small amount, since the fourth quarter of 2002. At the height of the credit bubble in 2008, debts topped at 116% of disposable income." Household debt service payments as a share of disposable income is extremely low, near the lows of the last 40 years: https://fred.stlouisfed.org/series/TDSP https://fred.stlouisfed.org/series/TDSP [1] https://www.marketwatch.com/story/households-in-best-position-to-handle-debt-in-nearly-16-years-2018-08-14 https://www.marketwatch.com/story/households-in-best-positio...
- ardy42 8y ago
  >> The economy is growing but it doesn't appear to actually be flowing back into most citizens pockets. The unemployment rate is very low but wages aren't rising. > Could you link something that supports your opinion? This does: Are Superstar Firms and Amazon Effects Reshaping the Economy? (https://www.nytimes.com/2018/08/25/upshot/big-corporations-influence-economy-central-bank.html https://www.nytimes.com/2018/08/25/upshot/big-corporations-i...) > The biggest companies may be influencing things like inflation and wage growth, possibly at the expense of central bankers’ power to do so.
- losteric 8y ago
  > Consumers wouldn't be spending if they didn't have extra cash in their pocket, and they expect the economy to stagnate/decline Cash... or credit. Americans currently hold around $3.6 trillion in credit cards and auto/student loans - those types of credit can hinder long-term growth. And the CCI is not a predictive metric. Consumers don't consider the economy in their purchasing decisions unless the media has given them reason to be concerned... if they're even paying attention to news at all. I'm also curious how CCI is influenced by lowering expectations - if populations have been struggling to find jobs for the past 4 years, how do people answer?
lsllc 8y ago
That's why the traffic is so damn awful now ... people are having to travel further out of the cities to find affordable housing, but the high paying jobs are in the cities.

by lovich 8y ago

compcoffee 8y ago

>The unemployment rate is very low but wages aren't rising. ...yet. Wages are a driver of inflation, which will rear its head as we reach late cycle. Then we blow up and start over. This is the way of the world.

joefranklinsrs 8y ago

Could you link something that supports your opinion? As for me: US consumer confidence surges in August to 18 year high. https://www.theguardian.com/business/2018/aug/29/us-economy-second-quarter-revised-report-figures https://www.theguardian.com/business/2018/aug/29/us-economy-.... Consumers wouldn't be spending if they didn't have extra cash in their pocket, and they expect the economy to stagnate/decline

simplemts 8y ago
"Consumers wouldn't be spending if they didn't have extra cash in their pocket, and they expect the economy to stagnate/decline" Debt, leverage, credit cards, loans, home equity lines, etc. Perhaps 2007 is a great teacher about overleveraged consumers "spending money in their pockets". It wasn't real, sustainable, and ended terribly.
craftyguy 8y ago
> Consumers wouldn't be spending if they didn't have extra cash in their pocket The entire credit industry would beg to differ.
tootie 8y ago
Wage data is well-tracked and is shown to be growing more slowly than inflation. It's possible the high growth in nominal wages are engendering some good feelings, but actual purchasing power is dropping. https://www.washingtonpost.com/amphtml/business/2018/07/12/inflation-hits-year-high-wiping-out-wage-gains-average-american/?noredirect=on https://www.washingtonpost.com/amphtml/business/2018/07/12/i...
- joefranklinsrs 8y ago
  My theory is that people are moving up to better jobs, after years of job training, education, and depressed demands, after 2008. Which would explain the low unemployment rate. Thus even though the wages for some industries are stagnating/declining, people are moving to better job positions, and thus have more money to spend.
  - tootie 8y ago
    Do you have data? That sounds like speculation. https://www.frbatlanta.org/chcs/wage-growth-tracker.aspx https://www.frbatlanta.org/chcs/wage-growth-tracker.aspx
  - sharemywin 8y ago
    Probably has nothing to do with all the credit consumers and businesses are running up: https://www.cnbc.com/2018/05/21/consumer-debt-is-set-to-reach-4-trillion-by-the-end-of-2018.html https://www.cnbc.com/2018/05/21/consumer-debt-is-set-to-reac... https://www.washingtonpost.com/business/economy/beware-the-mother-of-all-credit-bubbles/2018/06/08/940f467c-69af-11e8-9e38-24e693b38637_story.html?noredirect=on&utm_term=.2029cdea6184 https://www.washingtonpost.com/business/economy/beware-the-m...
    - adventured 8y ago
      No in fact it doesn't. American households are in tremendous shape compared to many of their peers. The household debt burden is at a 15 1/2 year low (household debt as a share of disposable income). [1] Unlike the fake boom of 2004-2008, this one isn't built on a large expansion of household debt. Businesses have levered up some, however business profits are at an all-time high and debt accumulation began to decline in the most recent quarter (the tax changes + Fed rate policies should continue to push toward a decline; companies like Microsoft, Apple and others took on immense debt temporarily to use it to pay out profits to shareholders via debt rather than repatriate their cash at a high tax rate). In fact, the single most interesting thing about this economic expansion, is that we haven't seen a big increase in household debt accumulation vs income, compared to the prior three major expansions (late 1980s, mid to late 1990s, and mid 2000s). That either implies consumers are skittish about unnecessarily taking on debt (trauma from the great recession, very plausible), or there's another very big leg left in this expansion (which would be fueled by debt). "With personal disposable incomes at a $15.46 trillion annual rate in the quarter, the debt-to-income ratio dipped to 86%. That’s the lowest, by an admittedly small amount, since the fourth quarter of 2002. At the height of the credit bubble in 2008, debts topped at 116% of disposable income." Household debt service payments as a share of disposable income is extremely low, near the lows of the last 40 years: https://fred.stlouisfed.org/series/TDSP https://fred.stlouisfed.org/series/TDSP [1] https://www.marketwatch.com/story/households-in-best-position-to-handle-debt-in-nearly-16-years-2018-08-14 https://www.marketwatch.com/story/households-in-best-positio...
ardy42 8y ago
>> The economy is growing but it doesn't appear to actually be flowing back into most citizens pockets. The unemployment rate is very low but wages aren't rising. > Could you link something that supports your opinion? This does: Are Superstar Firms and Amazon Effects Reshaping the Economy? (https://www.nytimes.com/2018/08/25/upshot/big-corporations-influence-economy-central-bank.html https://www.nytimes.com/2018/08/25/upshot/big-corporations-i...) > The biggest companies may be influencing things like inflation and wage growth, possibly at the expense of central bankers’ power to do so.
losteric 8y ago
> Consumers wouldn't be spending if they didn't have extra cash in their pocket, and they expect the economy to stagnate/decline Cash... or credit. Americans currently hold around $3.6 trillion in credit cards and auto/student loans - those types of credit can hinder long-term growth. And the CCI is not a predictive metric. Consumers don't consider the economy in their purchasing decisions unless the media has given them reason to be concerned... if they're even paying attention to news at all. I'm also curious how CCI is influenced by lowering expectations - if populations have been struggling to find jobs for the past 4 years, how do people answer?

lsllc 8y ago

That's why the traffic is so damn awful now ... people are having to travel further out of the cities to find affordable housing, but the high paying jobs are in the cities.