Daily update
Daily update
- US employment report Friday means it is time for the monthly reminder that average hourly earnings are not wages, and are definitely not wage costs. If wages are stable and the number of low-paid workers in the economy increases, average earnings fall. At a time of structural upheaval, the composition of the workforce is likely to change. The distinction is important because (real) wages matter to consumer spending power, and wage costs matter to profit margins and potentially inflation.
- Today’s data is not really accurate. The UK’s Office for National Statistics has already admitted its labor force survey is not trustworthy. The US Bureau of Labor Statistics only admits to quality problems when asking Congress for more money to correct the problems. Federal Reserve Chair Powell’s big policy error was to stress data dependency when data is less dependable, which means markets react to the numbers.
- US Michigan consumer sentiment data continues to exhibit extreme partisan bias. The inflation expectations will continue to be determined by food and fuel prices.
- German final November consumer price inflation data was unchanged. The Bank of England inflation expectations data will, like the US expectations, be shaped by prices of high frequency purchases.
