Economist of the day

Posted: 25 January 2014 in Uncategorized
Tags: , , , ,

corpprofit-1 hatzius1

The strength (in profits) is directly related to the weakness in hourly wages, which are still growing at just a 2% nominal pace. The weakness of wages and the resulting strength of profits are telling signs that the US labor market is still far from full employment. . .

The bottom line is that the favorable environment for corporate profits should persist for some time yet, and the case for an acceleration in the near term is strong. Hourly labor costs would need to grow more than 4% to eat into margins on a systematic basis. Such a strong acceleration still seems to be at least a couple of years off.

Jan Hatzius, chief U.S. economist at Goldman Sachs

 

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