The economy’s leading indexes were pointing to a slowdown before bad weather hit earlier this year — but there is much more to the economy’s weakness than weather. Co-Founder and COO of the Economic Cycle Research Institute Lakshman Achuthan discusses with WSJ Live.Here is a direct video link.
Is the U.S. Heading Toward a Deeper Downturn? by WSJ_Live
As many pundits were celebrating the headline pick up last week in US Average Hourly Earnings (AHE) the ECRI pointed out that the pick up was not because of rising earnings but because growth in hours worked had fallen faster than pay growth. This is therefore actually negative for income growth and not a credible sign of wage inflation. Here is their chart.
…the commonly-touted “upturn” in earnings growth is largely illusory, and does not really point to a healing in the labor market, or necessarily imply a welcome rise in inflation, as some claim. It is risky to presume, based on AHE, that policy action has effectively achieved its goals of boosting inflation and healing the labor market. This is even more troubling in the context of the “yo-yo years” environment of weakening trend growth and more frequent recessions than most expect.” See: Earnings growth upturn masks labor market weakness.
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