Hourly Earnings Growth – Real Wage Growth Is Positive Again
Inflation missed estimates as CPI fell from 2.9% year over year to 2.7%. Hourly earnings growth was 2.9% which was a cycle high. Therefore, it’s not surprising real wage growth switched from negative to positive in August.
As you can see from the chart below, real hourly earnings growth went from -0.1% to 0.2%. I think real earnings growth will continue. Inflation is going to start facing tougher comparisons. The labor market is getting close to being full, and productivity growth is accelerating.
Year over year weekly earnings growth went from 0.1% in July to 0.5% in August. As you can see, production and non-supervisory workers saw hourly earnings growth improve from -0.3% to -0.1%.
Their weekly earnings improvement was the best out of these 4 categories as it went from -0.1% to 0.5%. Improvement to real earnings growth is a great signal for real consumption growth which drives GDP.
Hourly Earnings Growth – Pot Stock Soars
The top story on Wall Street was the volatile action in the marijuana stock Tilray which had 30 million shares traded on Wednesday. As you can see from the chart below, the stock increased 93%, fell 49%, and then increased 45% all in one day.
This small Canadian cannabis firm had a wild ride partially because it has a small float as there are only 17.8 million shares available. The stock had its IPO at $17 in July and peaked at $300 on Thursday.
This parabolic action has little to do with the fundamentals of the firm. It’s worth discussing if the bull market is near its end because of this wild speculation. This is similar to the meteoric rise of bitcoin and altcoins. They have since cratered as the total market cap for all cryptocurrencies is only $200 billion; it peaked at $835 billion on January 7th.
Hourly Earnings Growth – Major Indexes Mixed
The major indexes were mixed as the Dow increased 0.61% and the S&P 500 increased 0.13%, while the Nasdaq fell 8 basis points and the Russell 2000 fell 0.47%.
