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Friday, December 27, 2013

'Unemployment and Profits: A Dirty Little Secret'

Calculated Risk:

Unemployment and Profits: A dirty little secret, by Bill McBride: I'd like to repeat something I wrote 2 1/2 years ago:

[I]t really isn't much of a secret that Wall Street and corporate America like the unemployment rate to be a little high. But it is "dirty" in the sense that it is unspoken. Higher unemployment keeps wage growth down, and helps with margins and earnings - and higher unemployment also keeps the Fed on the sidelines. Yes, corporations like to see job growth, so people have enough confidence to spend (and they can have a few more customers). And they definitely don't want to see Depression era unemployment - but a slowly declining unemployment rate (even at 9%) with some job growth is considered OK.

Not much has changed (the unemployment rate is still high at 7%). And I still think unemployment should be the #1 political issue. ...

A high unemployment rate keeps wages down for most working Americans - and the recent income growth has flowed mostly to the owners of corporations and not to labor. This is not an ideal economic situation for most Americans (but ideal for a few). Enough rant - and I hope I don't repeat this again in another 2 years.

best to all

    Posted by on Friday, December 27, 2013 at 10:00 AM in Economics, Unemployment | Permalink  Comments (19)


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