The chart above show the year-on-year change in wages.
Notice the sharp decline.
Wages deflated by the CPI presents a gloomier picture.
Income is the driving force of consumption in the US and world
economies.
The housing debacle and stock market sharp decline represent
real wealth erosion and provide a blow to the consumer psyche.
Earnings will deteriorate further.
The only potential catalyst for improvement will be a decline
in oil and commodity prices.
Ironically, as the strong commodity-related sectors in the
market roll over, they will contribute to the drop in share
prices.
Sharp rallies do happen in bear markets, but by definition,
they should be sold.
4 comments:
Yep, that wage rate decline is understandable in times of economic worry. So what if your salary is no longer keeping up with inflation, be thankful you have a job.
And its only deflated by CPI. Try doing it with headline inflation. The same wage earners need to buy food and gas Will.
Rocky
Will,
How much of the decline in the commodity and oil, and its related sectors before it affects the index (e.g. spx) since Energy sector stand a good 15%+ of SPX?
Thanks!
-C3
anonymous
Weakness in the strong sectors in general, will contribute to overall weakness for the stock market.
Post a Comment