Is the End of Recovery Nearer Than Believed?
Sector-level economic data suggests U.S. growth is less than robust, says Morningstar’s Bob Johnson.
We were out of the office traveling for most of the week. Fortunately, the amount of economic data was extremely limited. The Job Openings and Labor Turnover report was the only U.S. item of much consequence this week. That report suggested that slow employment growth is more likely the result of a lack of workers and very discouraged employers rather than a lack of jobs. Please see our video here.
The Year of the Discouraged Employer
Our fears, not entirely substantiated, suggest that in a world where it is hard to increase prices, at least some employers are reluctant to boost wages to attract new workers because of the potential impact on their cost structures. Furthermore, this raises nasty human-resource conundrums about what to do about the wages of those already employed. I believe that in their situation of high uncertainty and limited ability to raise prices, at least some businesses are offering substandard wages and willingly accepting the lower growth and higher turnover they might engender. For now, that's just an unproven thesis.
Robert Johnson, CFA does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.