logo
  Join        Login             Stock Quote

Chart Chatter: Wage Growth & The Business Cycle

 June 04, 2012 11:21 AM


(By Capital Spectator) 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.

[Related -Level 3 Communications, Inc. (LVLT): A Good Time To Buy Says Macquarie]

Private-sector wage growth inched higher in April, enough at least to raise the year-over-year percentage change to 4.1%, or slightly above the 3.9% annual pace in March in nominal terms. The annual pace of real wage growth also perked higher in April. Is this a sign of economic strength that will help carry us through what looks set to be a turbulent summer? Or is April's pop in wage growth the last gasp of an economy that's struggling (and failing?) to digest a world full of hazards?

[Related -Abercrombie & Fitch Co. (ANF) Q2 Earnings Preview: The Unkind Quarter]

If real wages have any influence on recession risk, perhaps it's no small advantage that inflation-adjusted wage growth was 1.8% for the year through April. That's a bit more than twice the rate in December 2007, when the economy peaked just ahead of the Great Recession. A small edge, perhaps, but if rising wages can help keep a new contraction at bay, the April numbers are a small bright spot.

Nonetheless, there are plenty of reasons to be cautious. For one thing, April data now looks ancient in the wake of Friday's discouraging employment report for May. We'll have to wait a month to find out how wages fared in May. Of course, by that time there's a good chance that there'll be a lot less cyclical mystery otherwise, for good or ill.
iOnTheMarket Premium
Advertisement

Advertisement


Post Comment -- Login is required to post message
Name:  
Alert for new comments:
Your email:
Your Website:
Title:
Comments:
 

rss feed

Latest Stories

article imageXerox Corp. (XRX): An Insider’s $500,000 Insider Buy

Last week was a healthy week of insider buying as 194 companies reported purchase records. The number read on...

article imageQihoo 360 Technology Co Ltd. (QIHU) Q2 Earnings Preview: A Green Monday

Qihoo 360 Technology Co Ltd. (NYSE:QIHU) will report its second quarter 2014 financial results on Monday, read on...

article imageSix Stocks that Could Outperform in the next 90 days

Earlier today, Goldman Sachs put out its list of the 50 stocks that Matter Most. It’s a list of the 50 read on...

article imageFoot Locker, Inc. (FL) Q2 Earnings Preview: Running Past the Street View

Foot Locker, Inc. (NYSE:FL) plans to report financial results for its second quarter ended August 2, 2014 read on...

Advertisement
Popular Articles

Advertisement
Daily Sector Scan
Partner Center



Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.