My favorites are the changes to the real hourly wage, employment,
real retail sales and production. Measured yr/yr, the composite of the
four stands at -4.5% for Jan. Momentum is still to the downside, but
the window for economic recovery has opened a little further. The
yr/yr change in the wage stands at a strong 3.9%. The decline of
industrial production has tumbled to -10.0% yr/yr.but that brings it
below that of retail sales at -9.7%. This means weak production has
caught up with sales and that excess inventories are therefore being
worked off. Best now would be a period of stabilization of retail
sales, which did rise 1.0% in Jan.
The economic power index -- change in the real wage plus change of
employment -- stands at 1.7% yr/yr. Compare that to the 9.7% drop in
retail sales and you can see clearly how fiercely consumers have been
building savings and going light on the plastic.
The strength of the real wage gives the US a golden opportunity to
stabilize the economy with a better balance between spending and
saving. I hope we take it, because sooner or later, a weak economy
will bring the wage down.
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