Tuesday, July 11, 2017

Look - I'm not an economist but.....

"Minneapolis Federal Reserve Bank President Neel Kashkari said on Tuesday he finds it hard to believe that the US economy is in danger of overheating when wage growth is so low. "

Damn - crazy eyes Kashkari almost had me. I call him that because he tried to run for governor of California. I think it was last term. I almost agree with him. (almost) Wage growth has been anemic due to low inflation.

US unemployment is at 4.4 percent, below what most economists believe is consistent with full employment, and is one data point Fed policymakers cite when they explain why they have been raising interest rates, which Kashkari has opposed.

"It can't be that bad to find workers," Kashkari told the Minnesota Women's Economic Roundtable, adding that while he realizes there are complicating factors like the need for certain skills, when businesses really need workers they will raise wages. "We are not seeing wages climbing."

No Crazy Eyes - businesses will raise wages when they start getting demand and people start spending again. Right now growth is enemic enough they can just push the existing workers harder and pay them the same. Yet - it can still be really hard to find workers. See the feedback loop there?

I think he is too removed from the workforce. I can assure you that there are sectors of the economy where it's pretty hard to find people. Tech and construction.

Contractors are booked months out.  Which I have never seen in my life. Even during the hight of the housing bubble. If you needed a project done you could always get it started within a week or two. Now it's solidly 1-3 months. I assure you that some of the reason these guys are so booked out is because they can't find workers. If they could - they would just hire more and they would make more money. I'd be able to get my projects started within a week or two like the world used to be.

Hell, I've even started seeing gardeners with their kids working with them again. Like 15 year old kids. I haven't seen that in forever! The guy who does my  rental stopped being able to find people to work for him about a year ago I think.

So....... all we really need is the demand to light the spark of wage inflation.

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