Gary Shilling VIEW: It's All Uphill From Here for Corporate America
Fat profit margins are likely to buckle under the pressure to boost worker compensation.
Some say A. Gary Shilling puts the SHILL in SHILLing. It would then come as no surprise after a lifetime in the bond markets, I’ve grown to like voices and views from Mr. Shilling and cannot wait to read Dr. Lacy Hunt’s (Hoisington Investment Management Co … aka HIMCO) latest comment. For a primer of sorts, see his Q3 THOUGHTS HERE.
There are few if any modern versions with command of fact, ability to translate into English and simplify so that even I can understand, comprehend and offer some insight.
I can say I’m grateful to know of one who I believe to be heir to this thrown (for better or worse), Eric Basmajian of EPB Macro Research.
For now, though, there should ALWAYS be room for a view even IF less popular and that is where Shilling’s latest might come in.
It's All Uphill From Here for Corporate America
Fat profit margins are likely to buckle under the pressure to boost worker compensation.
Wall Street seers expect the benchmark S&P 500 Index to generate earnings per share that are up 46% this year from 2020’s depressed level, with growth decelerating to 8% in 2022, according to data compiled by Bloomberg. Even that lower number for the coming year may be too rosy…
There is some evidence OF wage-push-inflation but Shilling’s OpED ends with,
… Government policy now backs labor. The Biden administration and other Democrats are keen to redistribute income from higher-income to lower -income households. The proposal to increase the national minimum wage from $7.25 to $15 per hour is aimed at reversing income inequality. So, too, is Biden’s call for restrictions on non-compete clauses, arguing that they impede worker mobility and, hence, higher pay. Democrats’ proposals to lower the age for Medicare from 65 to 60 is also a method of income redistribution since it could push up wages as early retirements enhance the economic power of those still working. This would magnify the pandemic-inspired early retirement trend.
American business probably can’t reverse the ongoing shift from corporate profits to labor compensation, but it is fighting back. It has cut costs and used labor more efficiently recently. Since the economic bottom in the second quarter of 2020, real gross domestic product is up 12.8% and 2.7% above the level of 2020’s first quarter, but nonfarm payrolls have only recovered 10.3% and are still 2.9% below the pre-pandemic level.
Makes ME wonder about the political-economic system as it may now be diametrically opposed TO ‘free market capitalism’ and I say this trying desperately to avoid ‘taking sides’.
Hard to do, though, when you see things on ‘fake news’ sites like ZeroHedge showing FILINGS of Nancy Pelosi’s latest OPTIONS TRADES.
Sure LOOKS official. So, too, does THE SOURCE LINK (also provided by ‘fake news’ ZH)
Whats for thee is NOT FOR ME?