Another Bear said:
AunBear89 said:
golden sloth said:
I'm not an economist, but it does make sense to me that buyers would like to secure a surplus of items they need prior to the tariffs taking effect, leading to a temporary economic bump. This seems to be the case for soybeans.
https://www.reuters.com/article/us-usa-economy/consumers-soybeans-lift-u-s-economic-growth-to-4-1-percent-idUSKBN1KH0B7
Also, workers' wages have yet to significantly increase with regards to inflation.
But - the GOP and Trump and all the talking heads on Faux news told us the tax cuts would lead to higher wages? Did something happen?
The Trump tax cut were used to buy back stock.
Just repeating an inaccurate message doesn't increase the effect. Just shows lemming-like behavior.
The referenced buybacks came out of retained earning made before the tax bill went into effect. As for cash, corporations have seen limited cash flow from tax savings so far. They don't get withholding reductions like individuals - they make quarterly estimated payments. The stupidity of the article quoted was most of the corporate buy back occurred before any corporation had seen any "tax savings" through lower estimated payments. And if the premise of the comment is tax savings from the entire tax plan is going to be one quarter of tax savings means "the Trump tax cuts were used to buy back stock" then by that dumb logic, we might as well measure the efficacy of any program after the first quarter or two which means, for example, the Obama Recovery Act had a negative effect. (This, of course, is rubbish, as the projects needed time to be rolled out).
The other problem is the comment is just wrong and simply ignores material rises in increased inventory, order, average work week, non-farm payrolls (total payroll, not wage levels), and employment levels, which means corporations are using cash for assets and labor, not buy-backs.
But the usual posters are whining why are wages not going-up yet, its been like a whole 7 months since the tax bill took effect and the economy is booming (if it's not booming than why are we complaining about not having higher wages?). Economics 101 says that wage changes always follow behind business cycles because they are "sticky." Sticky wages are when workers' earnings don't adjust quickly to changes in labor market conditions. Wages should fall in a recession, when demand falls for the goods and services that workers produce. Assuming that the supply of labor does not change, reduced demand for labor should translate into lower wages. But that never happens due to a phenomenon called "downward wage rigidity." In a recession instead there is unemployment, sometimes on a mass scale, but no real change in wages for those still employed, at least for some period of time. In fact, the recent recession's hardest-hit industries manufacturing, finance, and especially construction experienced the greatest increase in wage rigidity per a Richmond FED study. Economists consider wages to be sticky on both the upside and downside. We are seeing employment up, but no meaningful change in wages (just the opposite of the recession scenario). But overall employment has increased and there are now labor shortages in many areas, so over time employers are going to have to pony up if they want to expand. That may not mean some of the gains will not be taken by inflation. Wage increases without increases in worker productivity can mean inflation (a long discussion for another time).
As for labor shortages, just some headlines of recent articles in the New York Times (nobody hear reads the WSJ so why bother): Amid Worker Shortage Trump Signs Job Training Order; May Unemployment Rate Rose for Best Reason; Unemployment Rate Hits Rare Low, as Job Markets Become More Competitive; Worker Shortage is Forcing Restaurants to Get Creative; Physician Shortage Causes Reliance on Foreign Medical Grads; Workers are Scarce: Is it the Work or the Wages?
The idiotic claim by Sarah Sanders that 70 of the tax benefits of the last tax bill will go to wage earners, too is utter rubbish. Business is the biggest winner and that is just fine with those of us wanting growth.
The problem is with all these key indicators surging, and unless Trump does something to screw things up (which is quite possible) the FED is going to consider the economy overheated and raise interest rates beyond current plans. I suspect Trump had seen forecasts and that is why a week ago he went after the FED publicly for raising interest rates. Warning bells should be going off. Turkish President Erdogan a while back put a lot of pressure on their central bank to not raise rates to spur credit growth and housing construction. The result: inflation and a collapse of the Turkish lira. BTW, Trump based his criticisms on housing starts being flat ...