Wednesday, April 26, 2006

Making my call on the economy for the day

In a recent post I calculated that a cash out home refinancing drop of 50% in 2006 would reduce consumer spending by 1.8% and could reduce the growth of consumer goods companies.

Well, the average hourly wage data is out at the bureau of labor statistics and hourly earnings are expanding at a 4.8% annual pace, more than enough to compensate for the decline in cash out refinancings. My call of the moment: the consumer will have enough cash to keep going unless gas prices get really out of hand.


Ten years of month to month average hourly production wage growth (source: Bureau of Labor Statistics). Current wage growth is more boom-like than bust-like and is more than enough to offset reduction in real estate cash out refinancing.

That's all for this quick update. I have more cooking for later, possibly today.

Click back to the main page!

3 Comments:

Blogger fishonhook668 said...

Where do find that stat- all I found wa this table which shows a 02% rise for March.

http://www.bls.gov/news.release/realer.t01.htm

5:14 PM  
Anonymous fiend said...

Where did you find that stat?

All I found was this table which shows 0.2% for March.

http://www.bls.gov/news.release/realer.t01.htm

5:15 PM  
Blogger FinanceWonk said...

I see where you are getting the 0.2% preliminary number for March. I was using the 0.4% revised number from February as reported April 8th in the wall street journal:
http://online.wsj.com/article/SB114441234065719966-search.html?KEYWORDS=hourly+wage&COLLECTION=wsjie/6month

This revised data does not seem to have made it onto the BLS site yet.

Now that I am looking in more depth I agree that perhaps we should expect something closer to 3.5% year over year growth.

Good observation!

7:14 PM  

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