The relationship between real (inflation-adjusted) wages and the business cycle is “inconclusive,” a recent study reminds. For example, the empirical literature “finds that the wages of newly hired workers are more cyclical than wages of workers in ongoing employment relationships,” notes a 2010 paper from the Federal Reserve Bank of Richmond. But if you’re inclined to see a procyclical link between wage growth and the economy generally, Friday’s income and spending update for April holds out the possibility that all’s not yet lost for expecting growth.
Monthly Archives: June 2012
Strategic Briefing | 6.4.12 | Jobs & The Economy
Growth Slowdown Seen for Third Year in U.S. Dodging a Recession
Bloomberg | June 4
The U.S. economy looks set to deliver a repeat performance in 2012: for the third straight year, it may suffer a swoon yet not slip into a recession.
“I don’t think the slowdown will be any more consequential than the past two years,” said John Ryding, a former Federal Reserve researcher who is chief economist at RDQ Economics LLC in New York. “There are positives out there in the economy. We’ll avoid a recession.”
Book Bits | 6.2.2012
● The Unfair Trade: How Our Broken Global Financial System Destroys the Middle Class
By Michael J. Casey
Summary via publisher, Random House
A wake-up call for middle class Americans who feel trapped in a post-crisis economic slump, The Unfair Trade is a riveting exposé of the vast global financial system whose flaws are the source of our economic malaise. Our livelihoods are now, more than ever, beholden to the workings of its imbalances and inequities. The trillions of dollars that make up the flow of international finance—money that is often steered away from the people who deserve it the most—have not just undermined the lives of working and middle class Americans. It is a world-wide phenomenon that is changing the culture of Argentina; destroying the factory system in Northern Mexico, enabling drug cartels to recruit thousands of young men into their gangs; that has taken down the economies of Iceland, Ireland, Spain, Greece, and possibly Italy; and is driving American companies such as a 60-year-old family owned manufacturer of printed circuit boards to shutter all but one of its factories. Veteran journalist Michael Casey has traveled the world—from China to Iceland, Spain to Argentina, Indonesia to Australia—recounting extraordinary stories about ordinary people from one continent to another whose lives are inextricably linked.
A (Partial) Antidote For Today’s Disappointing Jobs Report
Employment growth remained weak in May, the government advised earlier today, but the day’s other economic news offers more encouraging fare. Personal income and spending for April were strong enough to stabilize the year-over-year pace of growth. Meanwhile, the ISM factory index for May continues to signal growth–wobbly, perhaps, but growth just the same. Taken together with disappointing jobs report, it all adds up to a mixed bag, but that’s better than definitive, across-the-board evidence that the cycle has taken a turn for the worse.
Another Month Of Slow Job Growth In May
Job growth remained sluggish in May, the Labor Department reports. Nonfarm private-sector payrolls rose by a slim 82,000 on a seasonally adjusted basis last month. That’s the smallest increase since last August. It’s also a sign—confirmation!—that economic growth overall slowed in the spring.
Major Asset Classes | May 2012 | Performance Review
May was a rough month for financial and commodity markets—the worst, in fact, since September 2011. Most of the major asset classes slumped last month. The main exception: U.S. Treasuries, which buoyed the Barclays Aggregate Bond Index. Inflation-indexed Treasuries in particular performed handsomely, jumping 1.7% in May. Otherwise, red ink in varying degrees dominated.