Friday 28 July 2017

US wages outpaced GDP in H1

In line with the trend and consistent with a slowish growing economy where many companies are reluctant to raise wages but some stronger ones are.

According to the BEA release today, wages in $ terms grew faster than GDP in H1. Pretty clear which corporate sectors are getting pounded (autos, mobiles, retail, some industrial sectors and oil in Q2), but aggregate corp margin number should also be down.

I know this is a horrendous chart but there cyclical factors also at play that make it noisy. My overall point is that between growing corp margins and growing govt spending wages as a percent of GDP have shrunk for a long time, and seem to have bottomed now. The brunt of the rise will be felt by bubble levels of corp profits. The BAT tax was also supposed to reduce imports, but that seems to have been scrapped for now. 

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