March 12, 2018

|Daniel A. White

The mainstream media narrative around our economy goes something like this…growth is taking off after all the stimulus, full employment, rising wages, consumer purchasing, tax cuts, deregulation, and overall business prosperity.

Sidebars include how limited resources have the economy maxed out in terms of output, and inflation is pushing interest rates upward. Both of these stories noticeably chip away at the market’s momentum.

The problem with these “key messages” is assumptions about employment and production are being asserted without any proof.

Are we really nearing or in a state of full employment? And are we operating at maximum output?

How is that defined, exactly?

It isn’t just me asking this, but a former presidential economist too.

That uncertainty, along with recent economic legislation, might mean we’re pumping billions into an already maxed-out economy, which won’t lead to more jobs with better pay.

Instead, stimulus intended for growth will be applied to a mature economy, which likely means interest rate hikes and inflation.

In other words, people’s real wages – their pay relative to inflation – won’t change much, if at all.

Remember that blip in the market last month? It was due to a report that wage growth increased, which spiked fears of interest rate hikes and inflation.

So, who’s right and who’s wrong?

I don’t know!

It’s hard to trust data that is…let’s just say, tough to prove.

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