Dumb-Money Rally Rolls On
In the fourth quarter of 2007, the paychecks of American workers were growing at a rate of almost 9%. Here in the second quarter of 2008, they are not growing at all. That is a breathtaking deceleration of the economy.
Perhaps the global economy will save the US economy. But if that were the case, why are American paychecks being vaporized at such a rapid rate?
I, for one, will not get caught up in this bear-market rally. If you have long-side profits, you should think hard about taking them here.
May 17th, 2008 at 11:56 am
And further adjusting for population or labor force growth of +0.95%, the decline in wages was a huge 2.0% for the past 12 months
May 17th, 2008 at 12:57 pm
Hi Brian,
Yes, and you could adjust for wage inflation also.
Matt
May 18th, 2008 at 2:19 am
Inflation is monetary. An increase in the money supply will increase taxes. However, the “Austrians” are debating whether the supply is being inflated or not by Bernanke.
May 18th, 2008 at 12:19 pm
Yes, inflation is a monetary phenomena. However, many economists refer to rising wages as “wage inflation.” If workers won wage increases over the past year, then flat withholding tax growth indicates loss of jobs.
Matt
May 20th, 2008 at 1:28 pm
Don’t you mean “payrolls” not “paychecks”?
Russ
May 20th, 2008 at 2:56 pm
Russ,
It could be either or both. The last productivity report showed that a lot of workers had their hours cut.
Matt