Wages Climb Higher, A Generational Shift, and Real Treasury Yields Sink Deeper into Negative Territory
June 7, 2021 | FIRESIDE CHARTS
Friday’s jobs report came in below economists’ forecasts, though not due to lack of employer demand. The supply shortage is pushing wages higher, particularly in the recently revitalized leisure and hospitality sector where average hourly earnings climbed to $18.09 in May—their highest level on record. And the workforce is witnessing a generational shift as teen unemployment hits its lowest point in nearly 70 years while many boomers are deciding to Irish exit their way out of the labor force. The housing market meanwhile remains red hot, and as the conversation continues about a global corporate tax rate, we’re taking a look at the effective corporate tax rate in the U.S. and how significantly it can differ from the top rate. Meme stocks took off again last week and most major indices ended the week in the green, while real UST yields sink deeper into negative territory and spreads continue to contract.
1. As the most affected industries all try to re-open post-pandemic, there is a profound shortage of workers at the low end of the pay scale. This wage inflation is also worrying the inflation hawks:
Source: BofA Global Research, from 6/7/21
2. Teens are stepping up to fill the void:
Source: Labor Department, from 6/7/21
3. A lot of boomers, perhaps looking for an excuse to retire, left the workforce in droves during the pandemic. Only about half have returned:
Source: Pantheon Macroeconomics, from 6/7/21
4. Covid’s effect on housing prices have been phenomenal:
Source: Black Knight Home Price Index, from 6/7/21
5. Tax rates versus effective tax rates are a whole debate in itself. Folks love to go back and point to marginal rates with no thought given as to how much was actually being paid:
Source: BCA Research, from 6/7/21
6. Every major U.S. equity index, except the DOW Transports, were positive last week
Source: The Chart Store, from 6/7/21
7. While interest rates were little changed across the curve, factoring in inflation brought real yields deeper into negative territory:
Source: The Chart Store, from 6/7/21
8. Junk bonds have lower spreads than during the incredibly low volatility period of 2017 and early 2018:
Source: The Chart Store, from 6/7/21
9. In case you need to prepare:
Source: The Daily Shot, from 6/7/21
Disclosure: The charts and infographics contained in this blog are typically based on data obtained from 3rd parties and are believed to be accurate. The commentary included is the opinion of the author and subject to change at any time. Any reference to specific securities or investments are for illustrative purposes only and are not intended as investment advice nor are they a recommendation to take any action. Individual securities mentioned may be held in client accounts. Past performance is no guarantee of future results.