Corporate tax-reform and deregulation have been a potent tonic for U.S. economic growth, and now that growth is translating into higher pay. The employment cost index, which measures the total compensation paid to employees including wages and benefits, is up 2.8% over the last year—the fastest rate of growth since 2008. For employees in private industry, the news is even better. Wages and salaries are up 3% over the last year—faster than the average wage growth over the last two-decades. Bloomberg has more details. The latest results indicate employers are offering better compensation … [Read more...]
Lawmakers, Guns and Money
Big boosts to defense spending are building up backlogs at government military industrial contractors like Lockheed Martin, reports Doug Cameron. Orders for F-35s and THAAD missile systems are booming. Cameron writes in The Wall Street Journal: The world’s largest defense company by sales has been a prime beneficiary of Congress boosting Pentagon spending above requests from the White House in an effort to replace worn-out equipment and address an array of threats, including North Korea’s nuclear program and military buildups by Russia and China. Investors have fretted that defense … [Read more...]
Trump’s Pro-Business American Revolution: Part II
One has to search far and wide to find a single positive headline from the mainstream press about the Trump administration. Trade-wars and foreign policy gaffes dominate the papers, but the story that isn’t being covered well is Trump’s pro-business American revolution. After eight years of anti-business regulation and rhetoric, U.S. business finally has a spring back in its step. Small business confidence is at some of the highest levels on record, and CEO confidence, even in the face of some disruptive trade rhetoric, remains strong. The University of Michigan Survey of Consumers shows … [Read more...]
Price Controls: Bad Economics and Fuel for Instability
Basic economics dispels the idea that price controls are useful. Nevertheless governments (including America's) regularly try to control prices. Whether via direct price caps and floors, or quota systems, or through inflation or deflation of the money supply, government attempts to control prices are distortive to markets, and eventually lead to some kind of backlash. Sometimes the response is a black market, as is thriving in Venezuela today. Other times, hoarding takes place. Other times it's more violent. Sometimes, the hardest thing about price controls is removing them. People get used … [Read more...]
A Rust Belt Revival?
President Trump is focusing a massive effort on reviving America's Rust Belt. One measure of his success could be the demand for industrial property in the capital of the region, Chicago. TheRealDeal.com, a Chicago real estate news site, reports: The Chicago industrial market remained hot in the second quarter as asking rents hit a record high of $5.58 per square foot. Vacancy rates essentially remained even, inching up from 8 percent to 8.1 percent, despite the delivery of more than 2 million square feet of speculative space, according to Newmark Knight Frank’s second quarter … [Read more...]
America’s Lowest Unemployment Rate
It's been called the next Houston, or the next Atlanta, but people living there are having doubts about its rapid development. Nashville is the American metropolitan statistical area with the lowest unemployment rate, at 2.7%. Cameron McWhirter explains the city's appeal at The Wall Street Journal: As Southern cities draw more people from other regions, politicians, business leaders, economists and residents are increasingly focused on how to manage the growth to keep housing and other costs of living in line with wages. For decades, part of the South’s appeal has been low housing costs, … [Read more...]
Interest Rates Need to be Higher Pronto
Inflation? Yes it’s a thing. Anyone living in the real world recognizes it at the grocery store, in the real estate section of their local newspaper, and the stock market for that matter. Those in retirement trying to live off of their portfolio are paying the price for a reckless monetary policy. Rates need to be higher pronto. The editors of The Wall Street Journal write: Investors briefly bid up the 10-year Treasury yield above 3% on the news before it fell back to 2.97%. But forward guidance has always seemed overrated as a policy tool, and with growth picking up it was becoming a … [Read more...]
Highest Number of Pay Raises in Decades
The NFIB small business survey is showing the highest net number of firms raising worker pay in over three decades. A net 35% of small businesses polled report raising compensation over the last three months. This job market is on cooking. … [Read more...]
The Trump Economy is Rolling
There are more jobs available than unemployed workers. Workers of America unite! Bloomberg reports that job vacancies outnumber unemployed Americans for the first time in decades. The U.S. labor market has reached another milestone: For the first time in decades, there are more job openings than unemployed Americans who could fill them. Vacancies rose to a fresh record of 6.7 million in April, according to the Job Openings and Labor Turnover Survey, or JOLTS, released Tuesday by the Labor Department. More importantly, upward revisions to the prior month made it the first … [Read more...]
Canadian GDP Disappoints. What Does it Mean?
Canada reported first quarter GDP numbers last week and the country's production didn't increase as fast as economists had predicted they would. Dragging on the numbers was lower housing investment, a result of tighter regulation of mortgages in the Great White North. Kim Mackrael reports for The Wall Street Journal: Canada’s economy expanded at a slower pace than expected in the first quarter, as housing investment dropped sharply following the introduction of tougher mortgage rules. Weaker consumer spending and lower exports of non-energy products also weighed on growth. Canada’s … [Read more...]
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