Corporate profits after taxes set a new record. But the Fed is worried about wages
Corporate profits after taxes set a new record. But the Fed is worried about wages
Yesterday (Aug. 29) in the Q2 GDP update corporate profits were reported for the first time.
Since corporate profits are one of four long leading indicators identified by Prof. Geoffrey Moore, I have updated my look at them at Seeking Alpha.
Usual shameless plug: reading this isn’t just educational, it puts a few pennies in my pocket.
But of course corporate profits are a good way to measure how the producer sector is doing compared with ordinary workers. So below is a graph of corporate profits (green), the S&P 500 (blue), average hourly wages for non-managerial workers (dark red), and aggregate wages for all of those workers (light red), since the month Trump took office:
Profits are up over 17% and stock prices up over 22%. Meanwhile average workers’ hourly earnings are up (before inflation) less than 3%, and even in the aggregate are up only 7%.
And the Fed is worried about wage inflation.
Sure they’re worried. If wages increase in any meaningful way, profits might be reduced. Oh, no!
No, the Fed is worried about debt implosion, which they know will happen again with no ability to stop either.
Globalized production supply chains and a consumption obsessed America which basically “runs” the chains via debt expansion.
Under Trump, bank profits have surged, manufacturing profits have fallen. Ya think?