Whither Wages?

The stock market has been doing well, unemployment is at historic lows, inflation is relatively modest and a strong economy augers well for corporate earnings during the balance of this year, and perhaps for 2019.  In the midst of all of this good news, wage gains seem to be lagging.

Recently published employment data suggests that wages may be starting to improve, having increased 2.7% over the last 12 months.  In addition, broadly published reports of widespread labor shortages and unfilled positions, suggest that employers may be forced to increase wages in order to attract enough applicants.

Looking ahead, recently reported retail sales data and company reports suggest that consumers are spending more.  This may portend an expectation, on the part of many families, that their circumstances are improving.

Investors should continue to monitor new data as it becomes available.  The U.S. economy is largely consumer driven and spending trends may be instructive in assessing investment strategies.

All comments and suggestions are welcome.

Walter J. Kirchberger, CFA