Quote from Pa(b)st Prime:
To wit: Stocks rallied sharply in the face of high unemployment in 1991-1992.(ftp://ftp.bls.gov/pub/special.requests/lf/aat1.txt)
Many annalists didn't believe the accuracy of the data. (the Fed lowered rates from 7% in 12/90 to 3% in 9/92) After Bush lost the election there was a series of record bullish payroll reports and upward new job revisions. The market knew it before Labor did.
Oh yeah, many financial professionals know that it is BS. I will never forget hearing through the Squakbox from the S&P pit a trader's comment about the jobs report, like a year ago. He said "They talk about 300k jobs created, where the fuck are they?" Meanwhile the futures were trading stronly upwards pre-market, it was actually an up day. Like I said â PERCEPTION.
The minority is not going to rock the boat. If you are in the IB business, you do not really want the recession truth out, because that signals cuts across the board at any major IB firm. Putting it out in the open that the government economic reports have been statistically engineered beyond reality would cause a political & financial panick. I would be much more worried about the political aspect of it.
Toward that end, I think there's little variance among professionals as to what this environment holds. Bernanke sums it up. Inflation is persistent and troublesome. Price pressures are dependant upon continued strength of emerging economies. Higher household costs have been a break on consumers and employers. All knowns. However there's been obvious wage inflation across strata the past year. A decade ago $10 an hour was a SOLID poor mans wage. Now it's obtainable to most any low skilled worker. Management jobs that paid 60k in the 90's pay a hundo today. Even still, wages are lagging prices.
Even the government reports cannot show that there is any real wage growth. You have one jerk-off manager getting paid 90k, while 2 other managers were laid off, along with a whole slew of working professionals. You cannot show wage growth when whole manufacturing and tech bases are being shipped offshore and not being replaced. I have personally notated wage depression due to this trend, even for the managers. The ones you see getting the wage growth are the scumbag upper level managers who are executing these measures to a certain extent. Executives also, they have experienced very nice wage growth, all at the expense of the lower & middle level workers. Of course, the positions getting the nice wage growth are few in numbers and very hard to get, even if you are more than qualified for them.
Also, let's not forget the paper pushers. IB business is doing well, although their wages are not comparable to pre-2000. Bank lending operations are always growing, many on the upper level are getting the wage growth. You did mention construction, there is some wage growth there, although most of the labor does not see much. Plus, most of the crew is temporary, only the minority stays permanent.
There are a few other niche fields that I knew have some wage growth, but these positions are few and limited. Overall, there is wage depression.
Increasingly the Fed will become aware that "saving" the lower class is a losing game. Protecting lending institutions (vis a vis a steeper curve) and protecting the dollar will be the paramount policy.
I see America's future. It's Brazil.
You're definitely correct on that point. Brazil or Mexico or just about any other large third world nation. It's pretty much there. Plenty of economically deprived areas all across this nation which serve as proof.
