Markets & Economy

Our recovery won’t amount to much until wages and housing find better footing

Overseas weakness won't derail US economy, should help keep inflation in check

The gap in economic performance between the U.S. and overseas is widening, holding U.S. rates down. However, the data brings as many questions as answers. By historical comparison, the twin Institute for Supply Management surveys rising in August to 59 (manufacturing), and 59.6 (services) have reached inflationary overheating. But this is 2014, not history, and the tidy cyclical patterns of the 50 years after World War II no longer apply. Yet some patterns must apply, especially this one: At some point of U.S. economic growth and shrinking pool of labor, wages must rise. Right? Nothing new might happen in a globalized world, like substitution of overseas labor. Right. Long-term rates were poised to rise today on an August payroll report expected to surge since the ISMs did. But payrolls did not perform, rising only 142,000, a little more than half the forecast. The cyclical boys, wrong ever since 2009 (and longer), have dismissed the payroll report as an aberration. Could be. ...