Trump, Ocasio-Cortez, politicians wrong about US economy, stock market - Business Insider

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Opinion: Whether it's Trump or Alexandria Ocasio-Cortez, politicians keep getting it wrong when it comes to the US economy. By pearkes.

If stocks are rising, there must be some combination of falling discount rates and rising expectations for the growth of corporate cash flow. The former can be a bit complicated, and the latter isn't necessarily a sign that the economy is picking up, but often is.conducted by Bloomberg showed $36 billion in bottom-line benefit to major banks from 2017's Tax Cuts and Jobs Act. Bank stocks rising to reflect that windfall would not tell you much about the economy.

Put another way, the stock market moving higher is a good sign that US businesses as a whole are doing well, and when US businesses are doing well, the broader economy usually is too. While the stock gains are good news, they are quite derivative. So it's reasonable to say that stock market gains don't have much direct impact on the well-being of typical people, and Ocasio-Cortez is correct to identify wages as a key metric of economic vitality for workers.

The best measure of wages, which adjusts for changing demographics and composition of industries, is the Bureau of Labor Statistics' Employment Cost Index . The ECI which measures wages and salaries is up 3% versus the year before as of the third quarter of 2019, more than twice as fast as the post-crisis lows in 2010.The distribution of wage gains has also improved along with the aggregate growth rate.

 

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pearkes Oh don’t worry. No one believes gets it right either

pearkes Here are some fun graphs I just found from a couple of years ago to illustrate the problem, which hasn't really changed...

nycsouthpaw pearkes Bzzzt! The wage figures you quote aren't adjusted for inflation (is it 2.1% last year?) , so the real wage increase varies between a real wage cut & a 1% rise based on headline inflation rate, but then headline rate includes everything from bread to private jets...

nycsouthpaw pearkes Both sides, right? lol guess we can't really decide who's worse for our economy

nycsouthpaw pearkes 'About 15 million children in the United States – 21% of all children – live in families with incomes below the federal poverty threshold, a measurement that has been shown to underestimate the needs of families.' But pass the caviar.

nycsouthpaw pearkes It's also important to consider the effects of trillion dollar deficits & forcing the Fed to cut rates while we're at full employment. The latter was partly meant to prop up the stock market. In a correction, there will be calls to cut entitlements and workers will suffer.

nycsouthpaw pearkes 'Although this graph proves AOC's point that the benefits of a soaring stock market go to a tiny minority of people, I've prepared a word salad with fresh servings of weasel words like 'may' and 'indirect' in the hopes that readers won't notice my argument makes no sense at all.'

nycsouthpaw pearkes It’s too bad this column keeps getting it wrong when it comes to the US economy

nycsouthpaw pearkes Ah yes. Im sure the mistakes these two make are of equal weight and deserve to be criticized equally

conorsen pearkes As labor market tightens and wages grow, average people will deleverage and ultimately spend and invest more...provided we avoid tight money and austerity. But it’s also a great time to do things like massive infrastructure upgrades, climate mitigation and welfare at expansion

conorsen pearkes Seems like a false equivalence. Only 2 indicators are good for lower half, income growth and U3. As several have pointed out, ~.5% of that may be due to min wage increase. So only positive is u3? Suggesting this economy isn't great for most Americans seems fair.

pearkes The article points to inequality as a problem. This is a fallacy based on an unstated assumption of scarcity. Year 1: A earns $50k, B earns $100k Year 2: A earns $60k, B earns $150k Inequality increases, but both are prospering. The entire economy grows b/c it is not zero-sum.

pearkes pearkes 🤜🏽🤛🏽👏🏽👏🏽👏🏽💪🏽🇺🇸📈🔥

pearkes If overflated, how would a severe correction influence the other numbers you mentioned?

pearkes Thank you for your opinion piece. I found it interesting and educational. It left me with some questions though. If stock prices rising significantly because of 15% tax cuts how accurately do they reflect health and productivity of a company? Is the market overflated?

pearkes stock market is not economy. you cannot say bunch of virtual indices exchanged as bond or stock are economy. because they circulate hands in hands in day trading and general stock trading. you do not know where specific stock or bond ends up. it is not economy. it is ponzi scheme

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