InvestingDaily.com

Account Information

  • My Account

    Manage all your subscriptions, update your address, email preferences and change your password.

  • Help Center

    Get answers to common service questions, ask the analyst or contact our customer service department.

  • My Stock Talk Profile

    Update your stock talk name and/or picture.



Close
FEATURED STRATEGY

$1,230 in Instant Income?

$1,230 in Instant Income?Our top income expert recently pulled the wraps off his breakthrough moneymaking technique. And he proved beyond a shadow of a doubt how you can use it to generate instant cash payouts of up to $1,230 (or more). Over and over again. But then he took things a big step further and guaranteed you can make $1 million by following his program. And the second he did, our phones went nuts! Space is limited — get the details here.

 

 

Goldilocks Growth for Wages and Jobs

By Linda McDonough on July 12, 2016

After a strong June unemployment number was released Friday, the S&P 500 jumped 1.5%, likely moved by the headline: U.S. created 287,000 jobs in June vs. 175,000 expected.

But just as I tempered the despair following a crushingly-low May number (“Don’t Bet the Farm on Non-Farm Payrolls, June 8), I’ll remind you that this monthly data point is notoriously unreliable, though it often causes huge moves in the stock market.

However, other pieces of the Bureau of Labor Statistics’ monthly report contain real value, and they’re looking good. Data measuring wages and the number of people seeking work aren’t fodder for headlines though they illustrate a healthy employment picture.  And while these numbers exhibit some monthly variation, a stable upward slope in wages and job confidence should translate to higher consumer spending, which is good news for consumer stocks.

Wage growth clocked in at an annualized rate of 2.6% in June, up slightly from the 2.3% reported in May and the 2.5% seen in April. In fact, for most of 2016 wage growth crept up 2.5% to 3%, higher than the 2% growth realized in 2015. These are not huge gains, but are just enough to help consumers gain confidence that some income growth is dependable. Nothing freezes up a consumer’s wallet more than worrying that he’ll lose his job or be forced to accept a wage cut in the next few months.

While some retailers might yearn for higher wage growth, this 2% to 3% range is just right – the Goldilocks increase. Any lower and the increase would be too small to be noticed by workers; any higher and the number might set off some alarms for our friends at the Fed, who have noted that 4% wage growth might usher in unwanted inflation.

Fully Employed

Another number we like to watch in this report is the Part Time for Economic Reasons line item. This number measures the number of people who would prefer to work full time but have only been able to find part time work. As more of these workers find full time work, this number falls. In June it dropped 586,000 from May and has been steadily declining. Obviously a full time worker is a better spender than a part-time one.

Lastly we look at the nebulous but helpful Discouraged Worker line item. A discouraged worker is someone who has given up looking for work because of the disheartening employment prospects he or she has faced.

As this number increases it lowers the unemployment rate because this person is not counted in the denominator of total people looking for work, a quirky and perverse calculation that does not reflect an improving employment picture. It is another reason to be wary of the headline employment numbers. The number of discouraged workers fell 23% from last year and is down 7% from May. Although a decline in discouraged workers does not promise employment, it is an early indicator of future gains and a good sign that job prospects are looking up.

Slow and steady growth in wages and job prospects put a jump in consumers’ gait and should correspond to better news for consumer stocks. As we’ve noted before all consumer stocks are not created equally. At Profit Catalyst Alert and Growth Stock Strategist we’re hard at work to find just the right consumer stocks to benefit from improving employment.


You might also enjoy…

 

Obscure Tax Law Forces This Company to Pay Out 90% of its Profits

A 50-year-old loophole is forcing one company to pay out $9 of every $10 it makes from ironclad contracts with the U.S. Government.

In fact, over the past seven years, it’s made payments ranging from a few dollars… to tens of thousands of dollars… 30 times. Without a single cut! 

Most folks don’t even know this company exists, but the ones that do are making a mint.

Like Ted B., who’s set to receive a check for $1,096 just a few days from now.

Merrill H., a 58-year-old from New York, has collected over $3,385 so far. 

And retirees Beth and Terry P. have raked in $16,555.

I’ve put together a special report that will give you all the details, including simple instructions on how to get your name on the payout list before the next cutoff date.

You can get your copy here.

Stock Talk — Post a comment Comment Guidelines

Our Stock Talk section is reserved for productive dialogue pertaining to the content and portfolio recommendations of this service. We reserve the right to remove any comments we feel do not benefit other readers. If you have a general investment comment not related to this article, please post to our Stock Talk page. If you have a personal question about your subscription or need technical help, please contact our customer service team. And if you have any success stories to share with our analysts, they’re always happy to hear them. Note that we may use your kind words in our promotional materials. Thank you.

You must be logged in to post to Stock Talk OR create an account.

Create a new Investing Daily account

  • - OR -

* Investing Daily will use any information you provide in a manner consistent with our Privacy Policy. Your email address is used for account verification and will remain private.