You know that old adage about the economy, “A rising tide lifts all boats”? It means growth tends to benefit everyone, but in recent years, many Americans haven’t really been feelin’ it.
After all, though the economy has grown more productive, worker wages have been relatively stagnant since the 1970s. In fact, during the worst of the Great Recession and the long, slow aftermath, U.S. household incomes fell back to where they were roughly 25 years ago.
More recently, there’s been some improvement. Unemployment is down and readings of wages are slightly up. At the same time, companies are doing a pretty bang-up job of pocketing the economic expansions’ rewards as cold, hard profit.
The Dow Jones Industrial Average hit fresh records above 22,000 this week, due largely to a daily trickle of second-quarter profit reports, most of them so sunny we almost expected a few bunnies and unicorns doodled in the margins.
With second-quarter reports now in hand from about 80 percent of companies in the S&P 500-stock index, we know that profits are up about 10 percent so far, compared to the same period last year, according to FactSet, a service that crunches these kinds of numbers.
That’s somewhat below the first quarter’s rise of 14 percent, but keep in mind that the growth rate is likely to improve as the last 100 or so S&P companies report, since most tend to beat analysts’ expectations.
By comparison, U.S. hourly earnings have been growing about 2.5 percent each month this year, according to FactSet:
“Economic gains are not being distributed evenly among workers,” Glassdoor’s chief economist Andrew Chamberlain said in a recent announcement of the company’s own private study of wage trends. “Some of this weakness in pay growth can be attributed to automation, which is beginning to affect jobs that pay right around the median wage in the U.S., which are typical middle-class wages.”
And according to Glassdoor data, wage growth is actually slowing. The company said annual median base pay in the U.S. grew 1.2 percent in July compared to a year ago. That was down from growth of 1.5 percent in June.
Other details to watch:
– In the monthly U.S. jobs report due out Friday morning, most analysts expect to see nonfarm payroll growth of about 178,000 workers in July, with unemployment down to 4.3 percent, compared to 4.4 percent in June, according to Bloomberg.
– Of the S&P 500 companies reporting second-quarter earnings so far, 73 percent have beaten analysts’ consensus expectations, slightly above the one-year average of 70 percent, according to FactSet.
– Among the big individual earnings highlights on Thursday was the carmaker Tesla. Its shares jumped more than 6 percent after it reported a smaller-than-expected quarterly loss, along with a rosy outlook for production of its new Model 3 vehicles.
Tesla is now worth more than $57 billion as a company and has reclaimed the title it recently — and briefly — lost to General Motors as America’s most valuable carmaker.