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Wages are rising fast: Here’s where the money is going

You may have heard that the September 2017 jobs report was a bit of a disappointment. In some ways, that’s an understatement, as the economy lost 33,000 jobs—the first monthly loss in seven years. Some of that can be blamed on the recent hurricanes, but surely the hurricanes can’t be blamed for the downward revision of jobs numbers from both July and August. As I said, it was a disappointment, but almost certainly not the end of the current run of economic good times.

On what do I base that? Wages. Wages are now rising at the comfortable rate of 2.9%, year over year. That money immediately becomes part of the country’s economic spending power, meaning it will not only provide individuals with goods and services, but it will quickly be recycled back into corporate earnings, thus allowing businesses to continue to expand. Wages have tremendous inertia, both in motion and at rest, and now that the ball is in motion, it is likely to stay that way for many years.

As wages increase, economic activity follows. In this case, we don’t really have to guess what Americans are going to spend their money on, since they have, through numerous subtle and not so subtle ways, given us plenty of indication of what it is they’d like to buy. Today’s list may not be the most far-sighted I have ever created, but that’s another way of saying you won’t have to wait long to find out whether or not I was right.

Remember to treat these ideas as just that, ideas, and do your own research before making any investment decision.

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Julian Close

Julian Close became a stockbroker in 1995. In his 20 years of market experience, he has seen all market conditions and written about every aspect of investing. Julian has also written extensively on corporate best practices and even written reports for the United Nations. He graduated from Davidson College in 1993 and received a Master of Arts in Teaching from Mary Baldwin College in 2011. You can see closing trades for all Julian's long and short positions and track his long term performance via twitter: @JulianClose_MIC.