Rising Wages = Shrinking Corporate Profit Margins … And Falling Stock Prices?

By John Rubino – Re-Blogged From Dollar Collapse

Today’s Wall Street Journal contains a couple of charts that illustrate a relationship that’s not getting much media attention these days: The fact that tightening labor markets are forcing companies to raise wages, in the process squeezing their own profit margins.

Historically this margin compression has been either a cause of or contributor to cyclical turning points — in other words it coincides with recessions and equity bear markets.

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Inflation Is Back, Part 9: Two Sentences Say It All

By John Rubino – Re-Blogged From Dollar Collapse

Okay, one more look at wage inflation, followed by a short diatribe on the unfairness of life.

As the labor markets get tighter, power is finally shifting from companies to workers. For some reason Iowa is leading the way (the promised two sentences are in bold):

Say Hello to Full Employment — Want to know where the economy is headed? Look at Des Moines

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Inflation Is Back, Part 8: Labor Shortage Reaches “Critical” Point

By John Rubino – Re-Blogged From Dollar Collapse

Economist Peter Bookvar recently analyzed the the anecdotal evidence of capacity constraints piling up in recent industry surveys, including the following:

“Business is strong in all regions. Materials are tight. Trucking continues to be a major challenge.” (Chemical Products)

“Strong economic growth continues to put pressure/strain on capacity, lead time, availability and pricing across a broadening array of commodities and components.” (Computer & Electronic Products)

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US Adds 213,000 Jobs as Unemployment Hits 4 Percent, Wages Rise

By Thomson Reuters – Re-Blogged From Newsmax

U.S. job growth increased more than expected in June as manufacturers stepped up hiring, but steady wage gains pointed to moderate inflation pressures that should keep the Federal Reserve on a path of gradual interest rate increases.

Nonfarm payrolls rose by 213,000 jobs last month, the Labor Department said on Friday. Data for April and May was revised to show 37,000 more jobs created than previously reported. The economy needs to create roughly 120,000 jobs per month to keep up with growth in the working-age population.

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Retail Vacancy Rate Tops 10 Percent

By Bloomberg – Re-Blogged From Newsmax

Kids across the country are feeling the absence of Toys “R” Us. Retail landlords, too.

The amount of occupied retail real estate in 77 major U.S. metropolitan areas dropped by 3.8 million square feet (350,000 square meters) in the second quarter, the largest decline since 2009, according to a report by researcher Reis Inc. released Monday.

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German Industrial Training and Changing Technology

By Russ Juskalian – Re-Blogged From MIT Technology Review

The Ausbildung is widely touted as an example other countries should follow. But it’s struggling to keep up with technological change.

Within buildings 10 and 30 of the Siemens complex on the outskirts of Munich, the next generation of German workers are toiling over a range of test projects. The assignments are carefully chosen to impart the skills needed to continue the German miracle in automated manufacturing.

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Failed States, Part 1: Hopeless European Millennials And The Populist Takeover

By John Rubino – Re-Blogged From Dollar Collapse

Europe is frequently held up as an example of how the rest of the world should behave on a variety of issues. But this comparison misses at least two things: First, “Europe” is actually a lot of different countries in a lot of different situations. Second, much of what seems to work over there only does so because it’s being financed with ever-increasing amounts of debt.

For countries, as for individuals, borrowing money is fun at first but beyond a certain point becomes debilitating, as interest payments begin to crowd out everything else. That’s where a growing number of Europe’s failed states now find themselves, with overly-generous pensions and overly-restrictive labor laws making it virtually impossible to run a functioning market-based economy.

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