Wages and salaries, consumption’s indicators

1 min. reading
Financial Education, Market news / 9 August, 2017

Diego Balsa Portfolio Manager

Bearing in mind that consumer confidence in the USA has shot up over recent years (to even stand above the levels prior to the start of the 2008 crisis), it gives every indication that worker remuneration in the world’s biggest economy is going to start rising strongly over the coming quarters. As can be seen on the graph, US consumer confidence (blue line) represents a good leading indicator of how wages in this country (black line) are going to evolve in the near future. graficos There is, moreover, a further factor that could push wages up significantly. As we can see on the accompanying graph, unemployment in the USA is down considerably, at its lowest for the last 15 years (barely 4.37% of workers are unemployed). graficos
Such a low level of unemployment makes it more difficult to hire and raises employees’ “flight” risk, and therefore ends up producing higher wages.
If this important wage increase does eventually occur, it would be good for consumption on the one hand, but on the other, it could bring business margins under pressure because wages are a major component in company spending.