Poor Wage Growth: One Indication of "Social Malaise"

Yes, the stock market hit one record high after another in 2017 and prices continued to climb into record-high territory in early 2018.

The June 2017 Elliott Wave Theorist acknowledged this historic financial optimism but then added that negative forces were also at play:

The peak in Dow/gold in 1999 is also instructive, as there are numerous subtle indications of increasing social malaise since that time, not the least of which are the falling real wages, debt-strapped youth, increasing political animosity, the fact that the U.S. has been mired in a guerrilla war since 2001, and numerous other social conditions … . [emphasis added]

So, with the above in mind, consider this excerpt from a Dec. 12, 2017 Seeking Alpha article titled, "The Wage-Debt Deflation Dynamic And The Next Recession":

One of the important dynamics why recessions end is that inflation decelerates more than wage growth. Thus, for the 90% or so of people who still have jobs, there are some compelling bargains, enough to jumpstart more spending.

That all gets short-circuited if wages actually decline. Then, the fact that debt payments, unlike prices, do not decline, overwhelms the possibility of spending growth. That was one of the most ruinous aspects of the 1929-33 great contraction.

This is why I keep harping every month on the poor wage growth shown in the jobs reports. Here we are, over eight years into the economic expansion, and wage growth is actually declining a little, now at just 2.3% YoY.

This is the smallest wage growth of any expansion since the reports began over half a century ago. Simply put, we are more at risk of another wage deflationary "event" during the next recession, whenever it hits, than at any time since the 1930s.

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